Markets cannot continue like this

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Roula Khalaf, editor of the FT, selects her favorite stories in this weekly newsletter.

Good day. The US actions continued their several days yesterday, although Beijing declared that trade negotiations would not begin until the United States eliminated the so -called “Donald Trump’s” day of release “tariffs. Hope is difficult to eliminate. Send us an email: robert.armstrong@ft.com and aiden.reiter@ft.com.

Markets from ‘Liberation Day’

The markets have returned to where they were on April 3, the morning after President Donald Trump announced his “Day of Liberation” tariffs. We may go back to where we start, but the trip has been brutal, with each market movement driven by the news that leaves the White House:

That seems like a roller coaster, and felt like one for investors. And every time the markets fell, investors worried that there is worse to come. The VIX index, which uses the prices of the options to track the volatility that investors expect in next month, shot each time the markets fall. In this picture we have invested the VIX so that the correlation with the S&P 500 is visible:

With each decline that the stomach is agitated, the market was added to the bets that the Federal Reserve would be forced to go to the rescue. This table shows the S&P 500 against the expectations of the futures markets of the federal fund rate at the end of 2025:

The most terrifying part could have been the mass sale on the Treasury Bail of 30 years, visible to the left below. It is read as a sign that the long -term liabilities of the United States were suddenly suspicious. Long yields (which increase when prices fall) have remained close to their maximums:

The message echoed a drop in the dollar to a minimum of several years:

Have the actions that have taken it more difficult? The same ones that were the strongest a few months ago. The performance of the magnificent seven technological actions in relation to the market as a whole has increased and fallen with the index. Investors seem to be selling what is liquid and abundant: the safest way to reduce the risk:

The best performance actions? That is easy: the basic consumer products, the avatars of fear. Here we have invested the performance of the Staples sector to show how the market mirror image has been:

A market that responds violently to political news, and where prices reflect investors trapped in a manic cycle of hope and fear, is not sustainable. We cannot continue like this. One of the two things has to happen. Or the White House provides sanity and predictability in politics, in which case the markets can stabilize at a relatively high level. Or the White House continues in its current way, in which case the markets will find a new and much lower level than the prices in years of volatility will come.

Malo hard data have arrived

Speaking on large ticket elements seems to be slowing down.

Start with the house. Inventories are high, but prices have not dropped enough to clear the market. Both the beginning of housing and housing endings are falling. Use in construction has not yet fallen, but it is only a matter of time (SMBC Graphic Nikko Securities America):

The actions of the four largest housing builders have been in a six -month constant decrease:

On the existing local side, things are equally bad. Sales in March were 6 percent below February and 2.4 percent less than the previous year. The hopes for the usual spring sales have been turned off.

Rick Palacios, an analyst at John Burns Research and Consulting, points out the mismatch of supply/demand:

There is currently no urgency in the house. From the point of view of buyers, the “Fomo” [fear of missing out] The component of real estate, which is real and drives things, has been completely evaporated from the market. From a statistical point of view, more supply is rolling through the system, but we absolutely have no more demand. Sales are dragging down, and there is some pricing softness, and potentially more to come …

If it is clear that prices will continue to go down, there is a Margarita impact chain, where sales will decrease a lot …

It is not just housing. Preliminary requests for durable goods (expensive items from appliances to cars) increased 9 percent in March. But the increase is misleading. Most of that gain caused an increase in aircraft orders, which are lumpy. The report may also have been helped by steel companies and aluminum rates. Without planes and tariff solutions, “this would probably have been a deeply negative data point,” according to Rosenberg Research.

A setback in the purchase of large tickets is a reliable sign of a recession in the economic cycle. In fact, it could be said that the will to splash important things is the defining difference between an expansion and a contraction (hence the notion that “housing is the economic cycle.”

The Trump administration seems to be walking from the edge of tariffs. A softening in tariff policy would certainly help avoid a recession. Meanwhile, uncertainty could be the murderer.

(I reiterate)

A good reading

Athletic skill.

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