June 3, 2025

QuickTakes

Another Happy-Go-Lucky Day

President Donald Trump didn't raise any tariffs today. So it was a good day. Instead, Reuters reported today seeing a draft letter sent by the Trump administration asking countries to list their best proposals in a number of key areas, including tariff and quota offers for purchase of US industrial and agricultural products and plans to remedy any non-tariff barriers.

The deadline is tomorrow.

According to Reuters, "The document suggests an urgency within the administration to complete deals against its own tight [July 9] deadline." This confirms our position that the Trump tariff team wants to get this issue behind them or at least out of the headlines. Stock investors have been increasingly agreeing with us since April 9, when Trump postponed Liberation Day reciprocal tariffs for 90 days. They've also been increasingly agreeing with our assessment of the economy: It is remarkably resilient. So, the S&P 500 is down only 2.8% from its record high on February 19 (chart).

The resilience of the economy was demonstrated yet again in today's Job Openings and Labor Turnover Survey (JOLTS) for April. Even as consumer and business confidence tumbled along with stock prices that month, the labor market remained solid. Job openings increased 191,000 to 7.4 million, hirings rose, and quits fell (chart).

April's preliminary employment report showed that nonfarm payrolls rose 177,000. That's a solid increase. We also keep track of the difference between hires and total separations (including layoffs and quits) as an alternative measure of net monthly payroll changes (chart). It jumped 285,000 during April, suggesting the official number might be revised higher when May's report is released on Friday.

The JOLTS data are through April. May's Consumer Confidence Index survey includes a series for "jobs plentiful," which tracks the JOLTS job openings series reasonably well and suggests that the labor market remained solid in May (chart).

By the way, the analysts' consensus S&P 500 earnings estimates for 2025 and 2026 may be bottoming following declines that were undoubtedly influenced by Trump's Tariff Turmoil (chart). S&P 500 forward earnings has been stalled in recent weeks, though at a record high. It may be starting to move back up to record-high territory.

Not so happy-go-lucky are China's manufacturing purchasing managers. The Caixin China General Manufacturing PMI came in at 48.3 in May, down 2.1 points from the previous month, falling into contraction for the first time since September and reaching the lowest level since September 2022. Manufacturing output recorded its first contraction in 19 months, falling at the fastest pace since November 2022. Total new orders declined for the first time in eight months, at the sharpest pace since September 2022. The gauge for new export orders dropped to the lowest level since July 2023.

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