The Week in Charts (05/09/25)
The most important charts and themes in markets and investing, including:
00:00 Intro
00:17 Topics
00:47 First Trade Deal
09:25 Markets Pricing in a Positive Tariff Ending
11:51 The World Strikes Back (International Stock Outperformance)
15:06 The Fed Pause Continues
19:23 No Signs Yet of Higher Prices
23:33 The Second Home Slump
26:42 Declining Poverty Rates
Video
Blog

That is the same person, but he is serving too many bosses.
Still try to figure out why he took this job when he made many folds more as a hedge fund manager. If that is not money, he must be aiming to get to a position that he could not get otherwise. My guess is the next Fed chairman when Powell’s term is up in 2026. There are other candidates in the wing as well.
Now the tariffs is reduced from 145% to 80%. These must be the alternative math. Just serving a mob boss.

Hi @fred495 and @Observant1 Thank you for the articles/links.
I'm sure the UAW pro-Trumpee's (who were about to have a love-fest in public with the Donald) while at a recent rally in Warren, MI are still self assured all will be well, given enough time. I suspect that where we live in Michigan, we may be able to hear the large head slaps when their day arrives. I 'only' visit two Facebook pages of far right folks who I worked with 20 years ago. Neither of these folks are writers in their own right. They only copy and paste 'whatever' from other FB pages into their sites. The point being.....these folks only find and throw the garbage and lies to their pages. There isn't any backup links or data about a given statement. This remains the problem that the reasonable folks having common sense can't grasp. These folks are lost and part of a cult. Scary stuff.
They don't realize that they will likely become part of the damage taking shape.

i.e., trump is telling big3 its time to cough up again...and offer that F150 special edition in mascara orange by trumpcoin only.
https://fr8technologies.com/press-release/freight-technologies-secures-up-to-usd-20-million-to-create-an-official-trump-token-trump-treasury/

FYI, here is an excerpt from an article in today's NYT that brings the US/China tariff situation up to date:
"President Trump suggested on Friday that he was open to sharply reducing the tariffs that the United States had imposed on China, as American and Chinese negotiators prepare to meet in Switzerland this weekend for high-stakes trade talks.
Trade tensions between the United States and China have roiled international markets and the global economy. The negotiations on Saturday and Sunday are intended to de-escalate the situation and help set the stage for a broader trade pact between the two economic superpowers.
In a post on social media, Mr. Trump said that an 80 percent tariff on China “seems right,” adding that it would be “up to Scott B,” an apparent reference to Treasury Secretary Scott Bessent.
An 80 percent tariff would be a big drop from the current 145 percent that Mr. Trump imposed on Chinese imports in recent months. But that high a level would still shut off most trade between the countries. Chinese data released on Friday showed shipments from that country to the United States plunged 21 percent in April from the same period a year ago.
This week, the two sides agreed to hold meetings in Geneva that will include Mr. Bessent; Jamieson Greer, the U.S. trade representative; and He Lifeng, China’s vice premier for economic policy.
The recent elevation of Mr. Bessent, who is viewed as a pragmatist on trade, to lead the talks with China has also helped to calm markets. The Treasury secretary has argued that the tariffs and trade restrictions that the United States and China have levied are “unsustainable” and has urged Beijing to begin talks to address what the Trump administration views as unfair trade practices.
Despite signs of greater flexibility from Mr. Trump, an 80 percent tariff may not be low enough to restart business across the Pacific.
While it differs from company to company, some executives have said that tariffs above 50 percent are generally enough to freeze exports to the United States. Companies that are not able to find an alternative source of supply for their products outside China are facing the prospect of bankruptcy and layoffs as the summer grinds on and even 25 percent tariffs can be crippling.
Economists have warned that the chances of a recession in the United States are rising because of Mr. Trump’s tariffs. Last month, the International Monetary Fund downgraded its outlook for the United States and global output."

I enjoyed the inaugural article and the article for "building a chaos-resistant portfolio".
I haven't had an opportunity to read all the May 2025 articles yet...
Glad that you're chugging along just fine!

The "major trade deal" with the UK is not as comprehensive as some may have suggested.
"Trump declared on social media this announcement would be a "major trade deal" - it's not.
He does not have the authority to sign the type of free-trade agreement India
and the UK finalised earlier this week - this lies with Congress.
Congress would need to approve a trade agreement, which would take longer
than the 90-day pause in place on some of Trump's tariffs.
This is an agreement which has reversed or cut some of those tariffs on specific goods.
It is only the bare bones of a narrow agreement,
there will be months of negotiations and legal paperwork to follow."
https://www.bbc.com/news/articles/c15ng4g5g0eo

Albeit a bit delayed by what seemed like a pretty routine respiratory infection about which my doctor, a generally delightful young practitioner, decided to get all apocalyptic. Missed three days of classes, which is a 41-year record for me, but I'm chugging along just fine.
Highlights of the issue are Lynn Bolin's ongoing attempts to help us think clearly in turbulent times, most particularly about the possibility that fixed-income funds are actually more attractive in their environment than growth funds.
Quick Launch Alert on the latest member of TRP's Capital Appreciation suite, Premium Equity Income. My reading is PRWCX with an options overlay.
Profile of Dynamic Alpha Macro, which mates a low-cost equity ETF sleeve with a macro hedge fund. More correctly, the futures trading sleeve is advised by the manager of a hedge fund which also, and separately, embodies the strategy. Though Dynamic understandably doesn't talk about the hedge fund with appears to have returns north of 10% APR over 10+ years, with a correlation to the S&P 500 of -0.1.
Updates on Chaos-Resistant portfolios, including a tip of the hat to Lewis Braham's fine essay on the subject.
Charles has added functionality to MFO Premium (daily fund flows?) and The Shadow continues to highlight the industry's activities, including what seems to be an impulse to convert funds to ETFs rather than liquidate them.
For what joy that all brings!
David

From Barrons last night:
"By Sabrina Escobar | Thursday, May 8
Rocket Ship. Stocks jumped Thursday after President Donald Trump announced a trade deal with the U.K. just days before the U.S. is expected to begin negotiations with China.
The U.K. deal maintains the baseline 10% tariff on imported goods announced in April, but includes a lower tariff for some cars made in the U.K. as well as "billions of dollars of increased market access for American exports," Trump said.
The deal with the U.K. doesn't provide much tariff relief on its own, but markets rallied on the expectation that this is just one of a series of agreements that will bring down overall tariff levels.
That hope was enough to shift investors to a risk-on mode. The tech-heavy Nasdaq Composite rose 1.1%, the S&P 500 closed 0.6% higher, and the Dow Jones Industrial Average gained 255 points, or 0.6%. Even Bitcoin and other cryptocurrencies rallied (more on that later).
Trump himself seemed to be egging investors on.
"You better go out and buy stock now," he said in the Oval Office. "This country will be like a rocket ship that goes straight up. This is going to be numbers that nobody's ever seen before."
But as my colleagues note, "there are good reasons the U.K. deal was the quickest and easiest to complete, and it doesn’t necessarily guide the way for others."
For one, Trump's biggest gripe at the moment is America's trade deficit with other countries, and a deal with the U.K. won't make a big dent in total deficits. The U.S. actually ran a surplus with Britain in the fourth quarter. Plus, the U.K. has some "low-hanging fruit" it can offer as concessions, such as easing restrictions on agricultural imports from the U.S. It's not clear what countries with trade surpluses with the U.S. (such as China, India, and Vietnam) "can put on the table," my Barron's colleagues wrote.
The negotiations with China -- set to start this weekend -- may prove particularly tricky, and analysts warn investors not to get their hopes up for a dramatic rollback in tariff rates. Veda Partners’ Henrietta Treyz told my colleague Reshma Kapadia that investors' expectations that the meeting could result in a tariff rate as low as 40% was “insanity.”"

Thanks @Charles. Nice charts.
After today PRWCX is off about 3.5% YTD. Truly insignificant following consecutive years of +18%. and +24%. The fact some $$ has flowed dribbled out does not surprise. I’d have expected more.

@Crash Quarterly earnings report for ET, tomorrow, Tuesday; may provide a better picture going forward.

True. I put in the limit order on last Thursday, overnight.

Next, ex-div date on 09 May, '25, Friday. Since earnings, the stock price has soared. I expect a drop on Friday. Mr. Market continues, as ever, to overreact in the short-term. Always the short-term. And always overreacting, whether to good or bad news.

@hank. Looks like about $500M outflows in past 3 months.

@hank. Looks like $1.3B outflows in past 10 months, or less than 1%.

Easy example of moving the goalpost.
The yearly inflation in 2025 is down from 3% to 2.4%.
Is this great? Yes.
None of the articles mentioned it, but they tell you the inflation will be terrible months from now, inventories will be down and our kids will not be able to buy what they want.

By Jennifer Rubin, The Contrarian
"The economy is at the mercy of the least informed president in history"
Trump’s scattered brain creates havoc
From Paul Krugman:
"Why you shouldn’t get excited about his “deals”"
Will Trump Pretend to Fix What He Broke?

Now that tariffs are significantly affecting GDP, it's become a bit more important to understand just what GDP represents and how it is calculated. I posted something similar here:
https://mutualfundobserver.com/discuss/discussion/comment/191776/#Comment_191776
While nearly all (90%+) of tariffs are generally paid on the importer (US) side, that doesn't mean that the end consumer is paying all of that.
"the correct value of this elasticity [pass through percentage of tariffs to importers] is close to 1 (0.945 to be exact), based on the single study they cited. Brent Neiman"
https://www.aei.org/economics/trumps-tariff-formula-is-still-wrong-maybe-thats-why-no-one-will-admit-they-created-it/
My economics class professor said that the actual percentage passed through to end consumers is much less than that. That is, importing companies eat a good portion of the tariffs.
However, these are not normal tariffs (145%?) and I doubt importers and retailers are going to absorb the bulk of those ridiculous fees.

"Fund flows are kind of funny; they can be bad, good, or indifferent.
A fund wants a slow but steady flow of new money so managers can add a little more than they sell.
But the markets are not always so kind.
Sometimes flows come or go in a hurry, and that’s a problem."
"Let’s look at some of the funds that were at both extremes of the flow spectrum over the trailing year
through March 2025.
I’ll focus on active funds because flows rarely affect passive funds’ ability to execute their approaches."
https://www.morningstar.com/funds/these-funds-have-faced-extreme-flows-can-they-handle-it

This interval-fund (IV) is from Wellington Management/Vanguard and Blackstone/BX.
"Principal Investment Strategies. The Fund seeks to achieve its investment objective by obtaining exposure to a broad range of public and private market investments through individual securities, pooled investment vehicles, and derivatives. The Fund will utilize a flexible investment strategy across public and private equity and fixed income markets. Under normal market conditions, the Fund will seek investment exposure within the Fund’s portfolio to: (i) public equities investments in the range of 40% to 60% of the Fund’s net assets, (ii) public fixed income investments in the range of 15% to 30% of the Fund’s net assets, and (iii) private markets investments in the range of 25% to 40% of the Fund’s net assets (collectively, the “Underlying Exposures”)....
Underlying Exposure to private markets, passively managed equities and public fixed income assets shall be obtained through allocations of the Fund’s assets by the Adviser to investment vehicles (each, an “Underlying Fund” and collectively, the “Underlying Funds”) managed by affiliates of Blackstone Inc. (together with its affiliates, “Blackstone”) or by The Vanguard Group, Inc. or its affiliates (together with its affiliates, “Vanguard”), as applicable...
Investment Adviser. The investment manager to the Fund is Wellington Management Company LLP (“WMC” or the “Adviser”). The Adviser is registered as an investment adviser with the U.S. Securities and Exchange Commission (the “SEC”) under the Investment Advisers Act of 1940, as amended (“Advisers Act”). The Adviser is responsible for the Fund’s investment strategy and the day-to-day management of the Fund’s assets...."
https://www.sec.gov/Archives/edgar/data/2065909/000139834425008938/fp0093540-1_n2.htm
Credits LinkedIn 1 LinkedIn 2

AAII Sentiment Survey, 5/7/25
BEARISH remained the top sentiment (51.5%, very high) & neutral remained the bottom sentiment (19.0%, very low); bullish remained the middle sentiment (29.4%, below average); Bull-Bear Spread was -22.1%* (very low). Investor concerns: Tariffs, jobs, inflation, recession, Fed, budget, debt, dollar, geopolitical, Russia-Ukraine (167+ weeks), Israel-Hamas (67+6 weeks). For the Survey week (Th-Wed), stocks up, bonds down, oil down, gold up, dollar up. NYSE %Above 50-dMA 47.09% (negative). Fed maintained rates at 4.25-4.50%. #AAII #Sentiment #Markets
Sentiments are CONTRARIAN indicators.
*Negative since 2/5/25.
https://ybbpersonalfinance.proboards.com/post/1978/thread