On the March Jobs Report, and New China Tariffs

The new potential additional tariffs on China are a necessary counter-counter-counter-threat given China’s counter-counter-threat, and the widespread perception that both sides are bluffing. Productive peace negotiations can only happen when there is real fear of war. China has the opportunity to take the high ground now by a relatively moderate response, which ultimately it must do to not be isolated in the community of nations on which it ultimately depends for its ambitions of legitimate super-power status. This morning’s payroll miss was as out-of-step on the downside as last month’s was out-of-step on the upside. We don’t see it as a warning-shot of incipient economic weakness. The small improvement in hourly earnings, driven by the sector-mix of payroll gains, won’t make the Fed any more aggressive.