“There is no disgrace in honest failure; there is disgrace in fearing to fail.” — Henry Ford
Chart of the Day
Good morning!
President Donald Trump wants America to once again be the manufacturing powerhouse of the world that it was for the greater part of the 1900s. Except, there’s good reason to believe it won’t exactly look like macho men putting together the Ford Model T on the assembly line.
He rightly wants to increase manufacturing jobs in the U.S., which were decimated as the country moved into growing services before the turn of the new century, even as manufacturing output rose. Scores of local economies plummeted as plants and production facilities closed. Many who once worked in these factories voted for Trump in hopes of a return to the golden days.
And sure, at a quick glance, it may seem like companies are finally listening and adjusting their business strategy.
For example, Nvidia has recently announced that it plans to produce up to $500 billion of AI infrastructure in the U.S. over the next four years. Nokia, albeit small but important as a signal for what others may do, said that it would “absolutely entertain” increasing its U.S. manufacturing capacity. IBM on Monday announced that it will invest $150 billion in the U.S. over the next five years. Nvidia shares are down 19% this year, Nokia are up 1.2%, and IBM have added 7.4%.
But the reality of what that is going to look like is much more complicated.
Fresh concerns about that were raised Monday when the Dallas Fed’s Texas manufacturing outlook survey reported that business activity fell to its lowest level since May 2020. The best comment was perhaps this from the report: “If we want to bring manufacturing back to the U.S., can we try not to kill the companies that can actually help do that before we get the chance?”
Domestic manufacturing is going to come with high labor costs, meaning companies will find a way to automate their assembly processes. Nike tried about 10 years ago but failed. A WSJ story reported that “robots struggled to handle the soft, squishy and stretchy parts that are integral to showmaking. Shoe fabrics also expand and contract depending on the temperature, while in shoemaking no two soles are exactly alike.”
But that was then and this is now. It’s quite possible that with the advent of artificial intelligence, it might be easier to automate for more companies, even if shoemakers still can’t. Of course that means that the jobs that get created might not need a bunch of workers who are big and brawny.
Instead, for a resurgence of American manufacturing to materialize, America is going to need an industrial policy, aka not just tariffs. Part of that would likely include tackling the widespread lack of internet access throughout much of rural America. If Trump has such a policy, he hasn’t told anyone about it yet, and businesses need to hear about it sooner rather than later so they can start planning.
The U.S. has long been the envy of the world in many other things. The only way it can be the same when it comes to manufacturing is if it establishes a rigorous industrial policy, which can save everyone a lot of time and headache.
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What are some other things that America needs to tackle before growing as a manufacturing powerhouse? Click here to send us your response.
📧✍️Here’s what a reader commented📧✍️
Question: What do you make of the growing wealth gap?
Answer: “Give a pile of food, take what you can eat; give a pile of money, keep taking.” We live in that kind of society. Wealthy people want more money and wealthy companies want their companies to grow forever. The gap is growing because there’s no middle.
Catch up with FS Insight
Today is one of the quietest days in markets since April 2 “tariff liberation day” and drifting higher is a good sign.
Technical
Overall, I expect that earnings beats out of this week’s Magnificent 7 earnings could have a further hand in helping trends make additional progress.
Crypto
We discuss the resurgence of USD inflows into stablecoins and ETFs, a rising CME basis that signals institutional longs, Helium’s major AT&T partnership, BONK’s new memecoin launchpad, why MicroStrategy may seek a fresh equity offering, and how a busy week of macro data could steer crypto.
News We’re Following
Breaking News
- Trump to Soften Blow of Automotive Tariffs WSJ
- Mark Carney’s Liberals win pivotal Canadian election FT
Markets and economy
- Consumers feel like they’re on ‘a very scary roller coaster.’ That’s bad news for Trump’s economy. MW
- UPS Stock Gains After Earnings. It’s Firing 20,000 Workers. BR
- ‘Nowhere to turn’: Small businesses dependent on imports from China are feeling more desperate AP
- Goldman’s Solomon Says Markets Will ‘Settle Down’ After Disorder BBG
Business
- GM Pulls Profit Guidance, Citing ‘Significant’ Tariff Impact WSJ
- Merck to Spend $1 Billion on New Factory to Make U.S. Supplies of Blockbuster Drug WSJ
- Secret Deals, Foreign Investments, Presidential Policy Changes: The Rise of Trump’s Crypto Firm NYT
- Novo Nordisk opens weight loss drug Wegovy to telehealth; Hims & Hers shares rocket 30% CNBC
Politics
- The 10 charts that define Donald Trump’s tumultuous first 100 days FT
Overseas
- Power Is Restored in Spain and Portugal After Widespread Outage NYT
Of Interest
- The 4 a.m. Wake-Up Is Not Just for Superman CEOs Anymore WSJ
- Lewis Hamilton Plus Ferrari Was a Match Made in F1 Heaven. Well, Not So Fast. WSJ
| Overnight |
| S&P Futures +11
point(s) (+0.2%
) Overnight range: -16 to +21 point(s) |
| APAC |
| Nikkei flat Topix flat China SHCOMP -0.05% Hang Seng +0.16% Korea +0.65% Singapore -0.17% Australia +0.92% India +0.01% Taiwan +0.99% |
| Europe |
| Stoxx 50 +0.02%
Stoxx 600 +0.29% FTSE 100 +0.07% DAX +0.7% CAC 40 +0.01% Italy +0.81% IBEX -0.43% |
| FX |
| Dollar Index (DXY) +0.23%
to 99.23 EUR/USD -0.32% to 1.1383 GBP/USD -0.34% to 1.3395 USD/JPY +0.52% to 142.75 USD/CNY -0.22% to 7.2716 USD/CNH -0.18% to 7.2714 USD/CHF +0.77% to 0.8263 USD/CAD +0.13% to 1.3848 AUD/USD -0.31% to 0.6411 |
| Crypto |
| BTC +0.4%
to 94885.48 ETH +2.36% to 1828.92 XRP +0.24% to 2.2942 Cardano +1.86% to 0.7116 Solana +1.15% to 148.75 Avalanche +1.39% to 22.13 Dogecoin +0.62% to 0.1793 Chainlink +1.55% to 15.08 |
| Commodities and Others |
| VIX -1.35%
to 24.81 WTI Crude -1.16% to 61.33 Brent Crude -1.29% to 65.01 Nat Gas +4.76% to 3.32 RBOB Gas -0.61% to 2.093 Heating Oil -0.97% to 2.154 Gold -1.0% to 3310.7 Silver +0.55% to 33.35 Copper +1.44% to 4.91 |
| US Treasuries |
| 1M -1.6bps
to 4.2769% 3M -4.1bps to 4.245% 6M -9.5bps to 4.0999% 12M +1.0bps to 3.9258% 2Y +1.8bps to 3.7112% 5Y +2.8bps to 3.8404% 7Y +2.8bps to 4.031% 10Y +2.5bps to 4.2332% 20Y +1.8bps to 4.725% 30Y +2.2bps to 4.704% |
| UST Term Structure |
| 2Y-3
M Spread narrowed 1.3bps to -62.2
bps 10Y-2 Y Spread widened 1.1bps to 52.0 bps 30Y-10 Y Spread narrowed 0.1bps to 46.9 bps |
| Yesterday's Recap |
| SPX +0.06%
SPX Eq Wt +0.28% NASDAQ 100 -0.03% NASDAQ Comp -0.1% Russell Midcap +0.43% R2k +0.41% R1k Value +0.35% R1k Growth -0.14% R2k Value +0.51% R2k Growth +0.31% FANG+ -0.31% Semis -0.62% Software +0.12% Biotech +1.4% Regional Banks +0.59% SPX GICS1 Sorted: Utes +0.7% REITs +0.68% Energy +0.63% Healthcare +0.37% Fin +0.32% Indu +0.31% Materials +0.15% SPX +0.06% Comm Srvcs +0.05% Cons Disc -0.09% Cons Staples -0.15% Tech -0.3% |
| USD HY OaS |
| All Sectors +5.5bp
to 420bp All Sectors ex-Energy +4.8bp to 379bp Cons Disc +5.8bp to 417bp Indu +5.0bp to 319bp Tech +3.8bp to 408bp Comm Srvcs +4.8bp to 602bp Materials +2.7bp to 400bp Energy +9.6bp to 454bp Fin Snr +5.0bp to 350bp Fin Sub +1.8bp to 289bp Cons Staples +8.1bp to 293bp Healthcare +4.5bp to 425bp Utes +6.9bp to 289bp * |
| Date | Time | Description | Estimate | Last |
|---|---|---|---|---|
| 4/29 | 10AM | Apr Conf Board Sentiment | 88.0 | 92.9 |
| 4/29 | 10AM | Mar JOLTS | 7500.0 | 7568.0 |
| 4/30 | 8:30AM | 1Q ECI QoQ | 0.9 | 0.9 |
| 4/30 | 8:30AM | 1Q A GDP QoQ | 0.3 | 2.4 |
| 4/30 | 10AM | Mar PCE m/m | 0.0 | 0.3 |
| 4/30 | 10AM | Mar Core PCE m/m | 0.1 | 0.37 |
| 4/30 | 10AM | Mar PCE y/y | 2.2 | 2.5 |
| 4/30 | 10AM | Mar Core PCE y/y | 2.6 | 2.78871 |
| 5/1 | 9:45AM | Apr F S&P Manu PMI | 50.6 | 50.7 |
| 5/1 | 10AM | Apr ISM Manu PMI | 48.0 | 49.0 |
| 5/2 | 8:30AM | Apr AHE m/m | 0.3 | 0.3 |
| 5/2 | 8:30AM | Apr Unemployment Rate | 4.2 | 4.2 |
| 5/2 | 8:30AM | Apr Non-farm Payrolls | 134.0 | 228.0 |
| 5/2 | 10AM | Mar F Durable Gds Orders | 9.2 | 9.2 |
| 5/5 | 9:45AM | Apr F S&P Srvcs PMI | n/a | 51.4 |
| 5/5 | 10AM | Apr ISM Srvcs PMI | 50.2 | 50.8 |
