Consumer Staples (XLP) eked out a positive session yesterday, benefiting from the flight to safety, although most of those fleeing opted for the sidelines.

No Winners

It was brutal across the board, with small revenue names taking the hardest hit. Low volume was the best performing factor, and it was down 1.01%.

Market Breadth

Breadth was an unmitigated nightmare.

• 1,040 advancers to 6,220 decliners between the New York Stock Exchange (NYSE) and the NASDAQ Composite
• 286 new lows to 42 new highs between the NYSE and the NASDAQ
• Down volume outpaced up volume on the NYSE by almost 8:1

Market Breadth	NYSE	NASDAQ
Advancers	236	804
Decliners	2,577	3,643
New Highs	12	30
New Lows	115	171
Up Volume	595.8 million	3.33 billion
Down Volume	4.67 billion	7.18 billion

The market finished well off the low, although it doesn’t feel like a consolation prize – because it’s not.  The S&P 500 (SPX) needs a close above 5500 to spark sincere interest.

There was an eclectic mix of advancers led by Newmont Corp. (NEM), riding the coattails of gold closing above $3,200.

The ten-year bond yield pulled back slightly, but the thirty-year bond continues to power higher, even with a solid 30-year bond auction.

Today’s Session

Equity futures were higher most of the morning, focusing on bank earnings, but that was always going to be short-lived.

However, the focus is on the tariff war, with China's latest salvo involving 125% additional tariffs on US goods. Currently, the levels are for public consumption only because costs on both sides of the ledger are too high to keep doing business. 

Remember, we buy close to $300 billion more from China than China buys from us.

Inflation Data vs Inflation Expectations and the Fed’s Guessing Game

Not only did this morning’s inflation data came in well below consensus, but the declines were so sharp that all the chatter would generally be about an imminent rate cut.

Total final demand price of -0.4 is remarkable.

Tariff talk influenced the tick higher in February CPI and PPI data because demand was pulled forward. So, it's very curious that such demand faded in March.  The biggest part of today's PPI report is a significant decline in the prices of goods.

We are being told to downplay this, and CNBC had on a Fed official who sees lingering inflation as a greater risk than labor weakness, which mitigates what is fantastic news on inflation.

Remember Jay Powell believes tariffs are a one-time price hike, so there is significant tension at the Federal Reserve. But he is the chairman, and the first-time data tilts in favor of his thesis, he will press the FOMC hard for rate cuts.

Comments

The constant drumbeat of the media is not helping. The rehearsed chorus lines of the "analysts" keep the down momentum going. Yet planes, restaurants and sporting events are at capacity. Fred Clauhs on 4/11/2025 9:45:11 AM

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