The Fed's tough job highlighted in the Beige Book that they write/Earnings commentary

According to the Chinese Ministry of Commerce spokesman speaking in Beijing today, "any reports on development in talks are groundless." So, they are not really talking and what would any deal look like? A 2.0 of the 2018-2019 agreement encouraging China to buy more soybeans, LNG, etc...? Our side needs to express to us what they want out of this if the economy and markets are going to have any comfort. My feeling is we don't know what we really want outside of regaining back the manufacturing of key things, a legitimate need but which could have been more easily achieved if mostly focused on rather than the scattershot approach taken that is threatening millions of businesses on the delusion that we're going to make a bunch of low cost things in the US again.

The Fed's Beige Book came out with perfect timing as it captures the response of businesses and consumers to the tariff onslaught. "Economic activity was little changed since the previous report, but uncertainty around international trade policy was pervasive across reports. Just five Districts saw slight growth, three Districts noted activity was relatively unchanged, and the remaining four Districts reported slight to modest declines." Sounds like a no growth economy.

"Non-auto consumer spending was lower overall; however, most Districts saw moderate to robust sales of vehicles and of some nondurables, generally attributed to a rush to purchase ahead of tariff-related price increases. Both leisure and business travel were down, on balance, and several Districts noted a decline in international visitors."

"Home sales rose somewhat, and many Districts continued to note low inventory levels. CRE activity expanded slightly as multifamily propped up the industrial and office sectors. Loan demand was flat to modestly higher, on net. Several Districts saw a deterioration in demand for non-financial services."

"Transportation activity expanded modestly, on balance. Manufacturing was mixed, but two-thirds of Districts said activity was little changed or had declined."

Lastly on the broad summary of note, "Cuts to federal grants and subsidies along with declines in philanthropic donations caused gaps in services provided by many community organizations. The outlook in several Districts worsened considerably as economic uncertainty, particularly surrounding tariffs, rose."

Here is some regional commentary on the price impact. I want to make something clear here, the prices of many things are going up and the only question is who is going to eat it via the extent of which companies can pass it on. But just because it doesn't end up in higher consumer prices for some things, doesn't mean someone in the supply chain is not getting hurt via lost margins and profits. And whether a one-time step or not in price, we all have PTSD from the 40 yr high in inflation and it's still going to hurt.

While I know there are many legitimate economic recession worries and I have them too, reading the comments below on tariff induced inflation really tie the hands of the Federal Reserve.

Boston:

"Prices rose modestly on average, but contacts said that prices could start to rise more rapidly in the coming months."

"Looking ahead, retail and manufacturing contacts alike cautioned that cost increases linked to tariffs, although still to be determined, could result in significant passthrough to their output prices. Expected passthrough rates were substantial, with half of manufacturers projecting a complete passthrough, mostly without lags. One manufacturer shortened the duration of its price quotes to 30 days in anticipation of the need to adjust prices rapidly."

NY:

"Both selling price and input price increases picked up to the higher end of the moderate range. Food and insurance costs rose noticeably, and price increases for some wholesale and construction materials—such as steel, aluminum, and imported doors—accelerated. Some manufacturers and distributors have begun adding surcharges to account for tariffs on shipments already in route. Still, a regional coffee roaster noted some easing in the price of commodity coffee. Firms dependent on imports expressed concerns about compressed margins and their ability to pass on cost increases to consumers. Contacts anticipated strong increases in input prices in the coming months and expected selling price increases to remain moderate."

Philly: