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Two gauges of U.S. manufacturing activity released on Tuesday indicate a slowdown in the sector over the past month. The Institute for Supply Management’s manufacturing index declined 1.3 points last month to 49, below the 50-mark separating expansion from contraction. The index of factory orders slumped to the lowest level since May 2023. Along with a bigger contraction in order backlogs, the drop in bookings caused production to shrink for the first time this year. Seven industries contracted in March, led by wood products, paper, plastics and rubber, and furniture. Nine industries reported growth, including textiles, petroleum and coal, and fabricated metals. Meanwhile, the S&P Global U.S. Manufacturing PMI just remained in expansion territory for a third straight month in March at 50.2, signaling a marginal improvement in operating conditions. “The strong start to the year for U.S. manufacturers has faltered in March," commented S&P chief business economist Chris Williamson. "A combination of improved optimism surrounding the new administration and the need to front-run tariffs had buoyed the goods-producing sector in the first two months of the year, but cracks are now starting to appear. Production fell for the first time in three months in March, and order books are becoming increasingly depleted."

 

Advisor Perspectives

Bloomberg

U.S. President Donald Trump's 25% tariff on imported vehicles is expected to hit working-class car buyers the hardest, as almost all low-cost new cars sold in the U.S. are built elsewhere. Lower-income buyers will also suffer from expected hikes in used car prices as demand surges and supply shrinks. New cars priced under $30,000 are already rare as the average new-vehicle price approaches $50,000. The only way automakers can eke out profits on economy cars is to build them in nations with lower manufacturing costs. A Reuters review of data from two auto research firms found just 16 models with an average sticker price less than $30,000 and only one, Toyota's Corolla, that is assembled in the United States. All others are made in Mexico, South Korea, or Japan. Slapping a 25% tariff on these low-end cars may force price increases that make them unaffordable to their target market or cause some automakers to abandon them entirely.

 

Reuters

The number of job openings in the U.S. were effectively flat in February, the Labor Department reported on Tuesday. The Job Openings and Labor Turnover Survey found that new job postings slipped to 7.57m,  from 7.76m in January. Economists expected job openings to drop to 7.625m, according to FactSet. The hiring rate was unchanged at 3.4% in February, near the lowest since the onset of the pandemic. The quits rate, which measures the percentage of people voluntarily leaving their jobs each month, was also unchanged at 2%. The number of vacancies per unemployed worker, a ratio the Fed watches closely as a proxy of the balance between labor demand and supply, remained at 1.1.

 

CNN

Bloomberg

Market Watch

Reuters

Johnson & Johnson (J&J) is determined to continue its fight against numerous lawsuits alleging that its talc powder caused cancer, following a U.S. judge's rejection of a third bankruptcy settlement attempt. Erik Hass, head of J&J's litigation group, said: "With the bankruptcy option now foreclosed, we will return to the tort system to defeat the meritless claims." The company has been attempting to use the bankruptcy code to settle claims while avoiding bankruptcy for its parent group, valued at approximately $400bn. However, Judge Christopher Lopez dismissed the latest bankruptcy filing, citing concerns over the credibility of claimant support and improper voting by some lawyers.

 

Financial Times

The Times

Prosecutors in Paris have called for German carmaker Volkswagen to face charges of aggravated fraud in France related to the Dieselgate emissions scandal. In 2015, Volkswagen admitted to selling 11m vehicles with devices designed to cheat emissions tests. Nearly a million French customers incurred costs for servicing and repairs after the scandal emerged. A 2021 expert report indicated that the company employed a "cost-benefit" strategy approved by management for the test-cheating software. Volkswagen contests the French allegations, saying that French consumers did not suffer harm warranting compensation, and that a previous German court case had already addressed these issues. "A double conviction on identical allegations is totally prohibited," the carmaker said. Paris prosecutors maintain that the French charges are "complementary" to the German case, focusing on consumer rights.

 

France 24

J.P. Morgan analysis reveals that personal lines insurers, which cover auto and home insurance, are particularly vulnerable to the impacts of U.S. tariffs. The report highlights that tariffs, such as the 25% on autos and auto parts, are expected to increase repair costs and used car prices, thereby eroding profit margins for companies like Allstate and Progressive. While commercial insurers and reinsurers face different risk structures, personal lines firms are at greater risk due to their reliance on the U.S. market. Overall, the analysis underscores the need for insurers to understand both direct and indirect tariff effects, with personal lines firms being the most exposed to potential trade disruptions.

 

Reinsurance news

Goldman Sachs Asset Management has published its 14th Annual Global Insurance Survey, revealing that 52% of insurers now view inflation as their primary macroeconomic risk, up from 42% in 2024. The survey, which included responses from 405 Chief Investment Officers and Chief Financial Officers managing over $14trn in assets, indicates a shift towards private assets despite economic challenges. Notably, 58% of insurers plan to increase investments in private credit over the next year, highlighting a strong appetite for alternatives. The survey also notes that 90% of insurers are considering or implementing AI solutions to enhance operational efficiency.

 

Reinsurance news

Senate Republicans are set to request the Senate parliamentarian, Elizabeth MacDonough, to evaluate a plan to make President Donald Trump's 2017 tax cuts permanent. Critics warn this could lead to an additional $4.6tn in debt over the next decade. The Republicans, holding a slim 53-47 majority, are attempting to navigate a complex budget process to pass the tax cuts and spending increases for border security and military. Sen. Jeff Merkley (D-OR) criticized the GOP's fiscal responsibility claims, saying: "Republicans love to talk about fiscal responsibility — until they're the ones in charge." If MacDonough rejects the plan, Republicans may consider extending the tax cuts for another 10 years or attempt to override her decision.

 

Reuters

French oil group M&P has seen its shares drop by 15% following the revocation of its licence to operate in Venezuela by the United States. The U.S. Treasury Department's Office of Foreign Assets Control notified the company of the decision, which is part of a broader move by the Trump administration to cancel authorizations for foreign partners of Venezuelan state oil firm PDVSA. Spanish company Repsol and Italy's Eni also received similar notifications. M&P said: "M&P is currently assessing the implications of this decision in close consultation with its legal advisers." The revocation comes as the U.S. imposes a 25% tariff on countries purchasing oil from Venezuela, impacting companies like India's Reliance Industries, which has been importing Venezuelan crude.

 

U.S. News

The Trump administration is offering coal-fired power plants and other industrial polluters exemptions from requirements to reduce emissions of toxic chemicals such as mercury, arsenic, and benzene. The Environmental Protection Agency has set up an electronic mailbox to allow regulated companies to request a presidential exemption under the Clean Air Act to a host of Biden-era rules. Companies were asked to send an email seeking permission from President Donald Trump to bypass the new restrictions. The Clean Air Act enables the president to temporarily exempt industrial sites from new rules if the technology required to meet them is not widely available and if the continued activity is in the interest of national security. Environmental groups denounced the administration's offer, calling the email address a "polluters' portal" that could allow hundreds of companies to evade laws meant to protect the environment and public health. 

 

Fast Company

Jack Dorsey, co-founder of Block, the company which operates payment platforms Square and Afterpay, the money transfer app CashApp, and the music streaming service Tidal, has announced the termination of approximately 1,000 employees via email, saying that the job losses are not due to financial constraints or increased AI usage. Dorsey wrote that the reorganization is about “raising the bar and acting faster on performance, and flattening our org so we can move fast and with less abstraction . . . we need to move faster to stay ahead of the transformational moment our industry is in, so we’re able to continue increasing access, openness and automation.”

 

The Guardian

Keisuke Yokoo, chief executive of state-backed fund Japan Investment Company, has told Reuters that Japan risks reputational damage if it blocks Alimentation Couche-Tard's $47bn bid for Seven & i Holdings. "It wouldn't be good for Japan's image", he said of the potential impact if the government were to intervene and block the bid. He added: "It's hard to see how the retail business is connected to economic security" - a reference to the Japanese government's classification last September of Seven & i as "core" to national security.

 

Reuters