Daily Commentary

MarketMinder’s View: We agree the global economy turned out more resilient than most feared following April 2’s Liberation Day tariff announcement last year. Though “trade shifted substantially,” world exports hit record highs in volume and value last year. This was partly driven by AI-related shipments despite “controls on both exports and imports of some of this equipment,” and those shipments show no signs of slowing this year. How did global trade persist despite American tariffs? “China’s exports of intermediate and capital goods rose by $223bn in 2025, more than offsetting a reduction of $130bn in exports to the US. ... Overall, direct US-China trade fell by around 30 per cent in 2025. But the US replaced about two-thirds of the lost imports with purchases from other exporters, while Chinese exporters of consumer goods, such as electric cars and toys, cut prices by an average of 8 per cent to find new buyers. The Association of Southeast Asian Nations countries’ exports thrived in this new world.” Lastly, regarding trade restrictions, “[US President Donald] Trump’s bark was worse than his bite. ... he did not do all that he threatened.” Meanwhile, “his actions led neither to a cycle of retaliation against the US nor, crucially, to imitation of the aggressive US repudiation of World Trade Organization commitments and norms.” The concluding paragraphs discuss America’s future role in the world, which reeks of political bias and speculation—we suggest readers focus on the largely fine trade observations. Global commerce’s resilience is a big reason why world stocks rallied hard after last April’s correction: Reality exceeded dour sentiment. Keep this in mind with Iran fears swirling now.

MarketMinder’s View: “A private gauge of China’s manufacturing activity eased from a five-year high in March, though it stayed in expansionary territory amid rising price and supply pressures. The RatingDog [which works with data aggregator S&P Global] general manufacturing purchasing managers index [PMI] fell to 50.8 in March from 52.1 in February, according to a statement released on Wednesday. ... The RatingDog reading contrasted with a competing gauge released Tuesday by China’s National Bureau of Statistics, which showed that factory activity expanded at its fastest pace in a year, buoyed by robust demand and a rebound in production following disruptions stemming from the Lunar New Year holiday.” RatingDog’s PMI focuses more on China’s smaller, private sector manufacturers while the official PMI skews toward larger state-owned enterprises. With both over 50—indicating a majority of firms see expansion, though the magnitude remains unclear—they continue contributing to growth in China and global growth overall. Now, both PMIs also “pointed to a marked increase in price pressures,” as a cause of concern, but we would note before the Middle East conflict erupted, many feared the opposite—deflation—underscoring how interpretations of the data can swing wildly based on sentiment. As always, focus on fundamentals. With Chinese inflation running at 1.3% y/y through February (per FactSet), we don’t see much issue on either side. As the economists here conclude, China is “less vulnerable” and “more insulated” than most given “its diversified energy mix, alternative supply channels and domestic coal-chemical and green capacity that can cushion tighter energy and petrochemical inputs ...” Chinese economic resilience remains better than presumed.

MarketMinder’s View: US consumer confidence unexpectedly brightened in March as “The Conference Board’s gauge increased to 91.8, from a revised 91 reading in February, data out Tuesday showed. The median estimate in a Bloomberg survey of economists called for a reading of 87.9.” Broader perspective, though, provides critical context. “The Conference Board’s index generally focuses on labor-market conditions, whereas a separate metric of consumer sentiment from the University of Michigan emphasizes views about personal finances and the cost of living. The cutoff for this month’s survey was March 24, more than three weeks into the war.” While business and labor market conditions improved (as of last week), more than offsetting deteriorating six-month-forward expectations, that mostly just tells you how Americans were feeling in the recent past—about their jobs. But labor-market conditions themselves are backward looking and offer no foresight into people’s prospects. Meanwhile, March’s University of Michigan consumer sentiment survey slumped -5.8% m/m to its lowest level this year (per UMich), highlighting how sentiment surveys can vary based on the questions. The upshot for investors? At Q1’s end, consumers’ aggregate self-assessments suggest they are holding up fine but dreading the future as energy prices spiked and Iran uncertainty weighs. That isn’t hugely shocking, but we think it does leave plenty of upside surprise if the conflict—and associated cost pressures—end sooner than most contemplate.