Blain’s Morning Porridge May Day 2025 – Start Watching the DATA as the reality of 4 years of Trump kicks in…

 “This is a hostile and political act by Amazon.”

Macro Economic Data paints an imperfect picture of the US economy – but the numbers are likely to be challenging in coming months. We should pay attention to them, but the underlying resilience of the US economy to disruption may yet surprise us!

A digression: May Day:  When I was young, the First of May was when we climbed the extinct volcano in the heart of Edinburgh, Arthur’s Seat, to watch the sunrise. Some very happy memories. The stated intent was to wash our faces in the early morning dew – but it was really about drinking beer and chasing girls. I don’t know where the tradition came from, but it was magical as the sun came up, perhaps raising ancestral memories of earlier folk fertility rituals. Ah, to be young again…….May Day is now a celebration of The Working People, but has very little to do with the US economy or the numbers it is likely to throw-off in coming months.

Back in the real world…

In 1815 the Ogre of Elba, Napoleon, skipped exile with his household guard, and landed back in France. He marched towards Paris and was welcomed back to his throne after the army flocked to his side. He struck early at the disjointed Anglo-Dutch-Prussian armies massing in Belgium. It was “near-run thing” said Wellington after defeating the Emperor at Waterloo, ultimately dispatching him to his final exile in the South Atlantic. It all happened over the course of 100 days.

Donald Trump has been just as disruptive during his first 100 days. The rest of the world is shaking in disbelief. Exile does not await Trump, (well not yet), but can we now expect the pace of his challenges to the existing order to slow? Probably not. To be honest it’s entertaining. I find guilty pleasure in reading his missives on Truth Social… and almost enjoy reading what outrageous claims press secretary Karoline Leavitt makes. She is now briefing MAGA influencers directly – understanding exactly how America forms its views on the  news and makes its voting decisions. I read a marvellous piece about “influencers cosplaying journalists” in the press room.

This is the world we live in… get used to it…

Lots of Macro-economic watchers anticipate the next few months will see a succession of poor US data emerge. It may start tomorrow with the Non-Farm Payrolls Number – which many observers will be somewhat disappointing. The consensus is for 135,000 new jobs created in April (down slightly from last month which itself was lower than expected). However, no one is quite sure what DOGE cuts in government, or how businesses are preparing for supply shocks might have impacted hiring policies last month.

Yesterday’s first-quarter decline in US GDP by 0.3% was largely a result of US firms stockpiling inventory ahead of Trump’s Tariffs rather than proof positive of economic collapse. But what it does highlight is that US retailers had figured out exactly what was likely to happen – that the costs of goods to sell to US consumers is set to rise dramatically.

One positive snippet is that Federal Government spending fell by 5% – quite an impressive number given the chaotic noise we’ve come to associate with Elon Musk and DOGE.

Imports surged by some 40% during the first quarter. The next quarter will not show the true effects of how Trump’s “Liberation Day” tariffs impact the economy – because of the way the GDP numbers work, a reduction in imports is positive for the overall number!

To be honest, I am finding the Micro data points – like the collapse in Transatlantic travel, hotel bookings or increasing bankruptcy hearings to be much more indicative of what’s really happening in the economy. Theses are very much worth watching and acting upon.

The general expectation is that the US economy is poised on the edge of recession – and that its all the fault of Donald J Trump. Yep, I’d probably go with that – with caveats.

The US economy is bigger than Trump. It will likely struggle and stall on the back of trade and supply frictions, declining consumer and business sentiment, rising inflation, and the potential of stagflation as rates rise. That’s the outlook, but predicting the economic weather is a highly inaccurate game. What we do know is every recession is followed by recovery as economies work themselves through shocks. We don’t know how deep the Trump Tariff Tantrum recession may go.

We may even be surprised by the upside – by the resilience of the US economy to Trump!

As a result Trump may even find himself a beneficiary of his own economic incompetence if the first two years of his second presidency struggle with the consequences of the economy adjusting to his current policies, but then stages a strong recovery as the effects of his presidency are absorbed. Recovery won’t necessarily be due to Trump’s policies like onshoring production back into the US, or better trade agreements benefitting the economy, but will more likely come from stressed companies finding ways to work more efficiently and effectively in what will likely remain a very imperfect US economy.

The fact is Trump promised his supporters dramatic change and reinvention – the creative destruction and rebirth of the US economy. That is what they are getting. Who knows? It will likely be imperfect… but. More than one economic commentator has pointed out that Trump seems to be an exception to the rule its “the economy stupid” that determines a president’s success – his supporters believe in him come-what-may, and the need for his chaotic reset.

Some of the recent earnings releases from the MegaTech firms have been massively strong – and they are de facto the basis of US Exports. There may be trouble ahead with Europe’s demands for greater regulation, but even Trump’s chaos is unlikely to wobble US business sectors that significantly. US CEOs will pay lip service to the White House while getting on with the business of making their shareholders rich – that’s the primary driver of US success!

One critical point to consider is a variation on my second market mantra: Trump will never be as bad for markets as we fear, but he will not be as good as his supporters expected. Translated it means the US economy will adapt…

One problem with the Macro economic data is how quickly the market starts to become anaesthetised to the releases – a string of bad numbers is seen as confirmation of a trend and usually doesn’t generate any real change in trading action. But a sudden unexpected, better than expected rogue number can trigger a massive uptick from traders trying to anticipate the trend changing direction.

That said… I will continue to find joy and amusement in the statements emanating from the White House. They are enormous entertainment value. Trump’s comments yesterday about the slide in stock markets all being Joe Biden’s responsibility for passing on a dismal economic position made me chortle in disbelief. If he really thinks so…. So be it.

While its worth keeping a close weather eye on how the US macro picture develops, its also worth watching key stocks and how they are performing (rather than just the stock market price!)

Out of time and back to the day job…

Bill Blain

Author Morning Porridge

Founder Windshift Capital

Partner Shard Capital