Based in Oxford and London, England, members of the Dangerous Sports Club were extreme sports pioneers. Active from the late 1970s for about ten years, they take credit for modern bungee jumping. While no April Fool’s, on April 1, 1979, two members of the Club — David Kirke and Simon Keeling — made the first modern bungee jump from the 76-meter Clifton Suspension Bridge in Bristol, England. The students hatched the hair-raising idea after discussing the land diving ritual of Vanuatu. This ancient rite of passage for young men of Pentecost Island was a true test of courage as land divers intentionally hit the ground. While the vines absorbed a sufficient force to make the impact non-lethal, that was some passage into manhood! By 1982, Kirk and Keeling had outgrown bridge bungee and were hurling themselves from mobile cranes and hot air balloons. On May 5, 2022, another Brit, Curtis Rivers, raised balloon bungee to fresh heights, diving from a hot air balloon at 4,632 meters (or 15,200 ft) over Puertollano, Spain, achieving the highest altitude bungee jump that holds to this day, according to Guinness World Records.

Metaphorically, yesterday’s Conference Board consumer confidence bested Rivers’ leap into the abyss…and it’s still cascading towards earth. Forward-looking expectations fell for the fifth straight month. In Pentecost Island fashion, the magnitude of the plunge drove the cumulative five-month drop to -41.9%, tying it for the third largest on record. Other -40% five-month declines ended in October 1990, November 1990, June 2008 and February 2009.

Digging deeper, the Conference Board noted that, “the three expectation components—business conditions, employment prospects, and future income—all deteriorated sharply, reflecting pervasive pessimism about the future. Notably, the share of consumers expecting fewer jobs in the next six months (32.1%) was nearly as high as in April 2009, in the middle of the Great Recession. In addition, expectations about future income prospects turned clearly negative for the first time in five years, suggesting that concerns about the economy have now spread to consumers worrying about their own personal situations.” The Conference Board’s tally of write-in responses revealed acute tariff terror, with mentions hitting an all-time high, explicitly in the context of higher prices and negative impacts on the economy.

The sister consumer survey from the University of Michigan (UMich) loudly echoed worries about job prospects. Our Labor Shock Indicator (LSI), which combines ‘fewer jobs’ with UMich’s ‘higher unemployment expectations’ starkly illustrates that households believe they are facing the worst labor shock in 18 years (orange bars). The dislocation in the BB-BBB spread glaringly disagrees with the fear depicted by the LSI (purple line).

The irony of tariff terror is that it’s manifested as a deflationary income scare. At a net -3.2, Conference Board’s Income Expectations took out the pandemic lows, sending it into the realm reserved for the post-Great Financial Crisis period, when lagging job market weakness continued to plague income prospects (lime line). A deflationary mindset is worse for the economy than its inflationary counterpart — households spend less and save more. In the meantime, the stabilizing mechanism of credit cards, already in decline, is poised to dip into negative terrain as paycheck shrinkage fears become embedded (lilac line). Nonfarm Quits via the Job Openings and Layover Turnover Survey, or JOLTS, also guides spending prospects. But we’ve already faded March’s dusty and dated bounce given labor fears have spiked and with them job insecurity (light blue line).

While Conference Board’s Present Situation index barely stumbled, ticking down to 133.5 from 134.4, the trend is telling when it comes to real income…less transfer payments, an NBER recession indicator (green line). Smoothing the picture to quarterly oscillations, the Present Situation index has contracted in every three-month interval since 2023’s fourth quarter (red line). Should April’s level be sustained, the negative stretch would extend to seven quarters.

While traders and central bankers will remain skeptical until they see the whites of the eyes of hard data validation, real personal income less transfers (PILT) have followed the Present Situation in past cycles (green line). The trend in PILT has already eased for four quarters, from a local high of 3.4% year-over-year (YoY) in 2024’s first quarter to a 1.1% YoY pace in 2025’s first two months. The bottom line: There’s not much of a firebreak left.

Employment and income concerns also present downside risk to JOLTS nonfarm Job Openings. This metric fell to 7.192 million in March, well below the consensus estimate of 7.5 million and below all 31 economists queried by Bloomberg. This reflection of employer caution tallied before the April 2^nd tariff announcements, will be further pressured in next month’s JOLTS. Before we get there, we get payroll revisions, which also inform the labor demand narrative. The JOLTS hires-separations (H-S) spread previews the two-month rewrite in Friday’s employment report. On that count, February’s H-S was revised down -81,000 and March’s was upped by 46,000, leaving the two-month nonfarm payroll employment revision expectation at -35,000.

The best news, for bungee jumpers that is, is that after the initial plunge, they bounce back. We’re not there yet as confidence has yet to translate to a hard data labor shock. The broader economy, however, is at the bridge’s edge if S&P Global’s GDP tracker is on point. Tied to a wider-than-expected March trade gap, Ben Herzon took this year’s first quarter growth forecast to -1.8% from the prior -0.2%. Dangerous sports, indeed.

Many things come in fours:

• Earth, Water, Air and Fire
• Right Atrium, Left Atrium, Right Ventricle and Left Ventricle
• Black Bile, Yellow Bile, Phlegm and Blood
• Melancholic, Choleric, Phlegmatic and Sanguine
• Spades, Clubs, Hearts, and Danielle’s Favorite — Diamonds
• John, Paul, George and Ringo
• George Washington, Thomas Jefferson, Theodore Roosevelt and Abraham Lincoln

There were also four Golden Girls, four Teenage Mutant Ninja Turtles, four Ghostbusters, four ghosts in Pac-Man, and four main characters in both Seinfeld and The Wizard of Oz. The most famous and infamous of all fours is, of course, the Four Horsemen of the Apocalypse from the Book of Revelations. The white, red, black and pale equines respectively represent conquest, war, famine and death, and are seen as harbingers of the Last Judgment.

While nowhere near as ominous, this week’s U.S. economic docket proffers four major indicators near and dear to Federal Reserve policymakers’ modus operandi smack dab in FOMC Blackout: core PCE inflation, real GDP, ISM manufacturing new orders and the unemployment rate. Yesterday’s singular report, the Dallas Federal Reserve’s Texas manufacturing survey, allowed for a valuable read through of all four.

Before diving in, the Dallas Fed headline number had its own ‘cycle-pocalyptic’ feeling to it. April’s headline -35.8 was twice as bad as the consensus estimate of -17.0. Since the survey’s 2004 inception, the April reading has two parallels — January 2016 (-36.6) at the depths of the 2015-16 energy bust/industrial recession and April 2009, in the final throes of the 2007-09 Great Recession. Moreover, the -40.3-point three-month collapse from January to April has but one rival, the Lehman-induced -43.4-point plunge in the three months ended December 2008, when, as you recall, the world as we knew it effectively ended.

Tariffs are so pervasive that Dallas Fed economists rolled out a panel of special questions on their impact. The theme of margin squeeze was on display in the very first question. On passing higher tariff costs onto consumers, 38.3% said it was ‘harder’ compared to three months ago, while 13.5% thought it was ‘easier.’ On the net impact of higher tariffs, 58.4% expected a decrease in profit margins, 60.0% were more pessimistic on their company’s outlook, 41.3% saw lower production, and revenues, 39.6% saw reduced capital spending plans and 30.6% expected decreases in employment levels. (All five of these negative answers were contrasted with significantly smaller shares of corresponding positive responses.)

Despite the squeeze, nearly 55% of District firms were planning to pass cost increases through to customers while 26% expected to pass ‘all’ tariff cost on (versus 25% saying ‘most’ and 41% saying ‘some’). In terms of timing, nearly half of Texas businesses planned to pass through ‘upon tariff proposal/announcement’ or ‘less than a month after tariff takes effect.’ And about another quarter saw this process taking place ‘1-3 months after tariff takes effect’.

The combined upstream industrial guidance of current and future manufacturing prices received is today’s endgame for core PCE inflation. Normalizing the Dallas Fed pricing measures revealed a convergence of sorts thus far in the second quarter. Future Prices eased to a 0.6 z-score (yellow line), while Current Prices rose to a 0.4 z-score (blue line). Neither metric suggest core inflation (red line) will resume a below-target trend anytime soon, but we emphasize that plans will not necessarily stick.

Moving on to GDP, the Dallas Fed current and future capex indices (orange and lime lines) have tracked the year-over-year (YoY) U.S. growth trend (purple line) over time with a higher beta coefficient. After below-normal signals over the past few years, optimism returned in 2024 and both capex figures moved back into line with the GDP impulse. In 2025’s first quarter, however, cooling resumed, which segued into April’s slippage. The acute rise in recession odds flag continued downward momentum.

GDP will give us a rear-view prism into the U.S. economy. The Institute for Supply Management (ISM) will preview the future. On that note, the Dallas Fed’s Future Inventories points to an ISM cliff. The -23.1 level at the second quarter outset starkly contrasts with the moderate negativity stretching from 2022’s third quarter to 2025’s first quarter (light blue line). At -24.8, the closest corollary is, once again, 2008’s fourth-quarter average. Dallas cast the downside dye for the ‘IT’-girl of leading indicators — ISM New Orders, which posted a mild contractionary average of 49.6 in 2025’s first quarter with weakness backloaded in March’s 45.2 read. While there is no consensus estimate for ISM New Orders, the Dallas Fed suggests taking the under on the critical – and recessionary – 45-threshold.

Resource utilization translates into relative tightness or looseness in the labor market. The uneven oscillations in capacity utilization (cap-u) since 2023 (green line) translate well to the mildly rising YoY path of the unemployment rate (lilac line). Cap-u easing in April to -3.8 versus the first-quarter average of -2.0 portrays a picture of an increasingly loosening labor market. Backing up this notion were three straight negative readings for both Current Manufacturing Employment and Current Manufacturing Hours worked. At the risk of repeating ourselves, such streaks are the sole preserve of recessions.

This week’s four horsemen flash stagflation risk, or worse, the mother of all margin squeezes if input cost passthrough fails to take hold. Given Texas accounts for a tenth of U.S. GDP, Eleventh District factory activity suggests the recession will deepen as the second quarter unfolds.

“The first thing you need to do in order to ‘clear’ is create an oasis in which to live. Your oasis is your safe place, your toxic-free zone.”

In the 1995 film Safe, Los Angeles housewife Carol White is suddenly beset by a mysterious illness. A nosebleed while getting a perm, a panic attack at a baby shower, and a violent coughing fit while driving all make clear to her that something is wrong. Mystified doctors and psychiatrists lead her to seek out alternative medicine and wellness gurus for answers. Is she allergic to the thick smog hanging over the San Fernando Valley? Are hidden chemicals and microplastics causing her harm? Or is it all in her head, perhaps a physical manifestation of the pressure she feels to be the perfect wife and homemaker? The film has no clear answers either, making it a riveting and terrifying watch. Shot on a paper-thin budget of $1 million, Safe put actress Julianne Moore on the map and feels even more relevant in our post-pandemic world.

Like Carol, countless Americans are beset by uneasiness and anxiety. At least, that’s what swelling ranks are conveying to the University of Michigan (UMich) with each passing month. April’s final numbers dropped on Friday, with headline sentiment sinking 8% to 52.2, a fourth sequential decline. Markets shrugged it off, inured as they’ve become to soft data. The S&P ended the week on a high note despite the absence of progress on the trade front.

UMich survey director Joanne Hsu cautioned against such sanguinity, noting that, “labor market expectations remained bleak. Even more concerning for the path of the economy, consumers anticipated weaker income growth for the year ahead.” Today’s top left chart links real consumer spending to UMich Median Income Expectations, both for the population at large and college degree holders. Expectations for college grads have a tighter correlation with spending vis-à-vis the general public, something we’d expect given they generally command higher wages and account for the lion’s share of consumption. Degree holder year-ahead income expectations sank from their first quarter average of 1.4% to 0.4% in April, a new post-pandemic low and fifth straight decline off 2024’s first-quarter peak of 2.9% (orange line). Should April’s trend hold for the rest of the quarter, it would take out the Great Financial Crisis (GFC) low of 0.5% hit in 2009’s second quarter. All signs point to a steep drop for real personal consumption expenditures from the first quarter’s 2.6% year-over-year (YoY) pace (blue line).

We can also use college grads to guide the auto sector. From January 2021 through the end of last year, UMich Auto Buying Conditions for the most educated had a strong 0.71 correlation with unit auto sales. But the two series have dramatically diverged in 2025. March saw unit auto sales spike to a seasonally adjusted annualized rate of 17.77 million from February’s 16 million, on par with March 2021’s 17.75 million print (light blue line). While the latter was influenced by stimulus payments from Uncle Sam and a post-pandemic urban exodus, today’s spike smacks of tariff front running. April Buying Conditions sinking from 59 to 42 flag sales’ unsustainability.

Weakening income expectations walk hand in hand with college degree holders’ deepening job market pessimism. A malaise grounded in years of a white-collar labor recession has morphed into a shock, evident in the collapse in the spread between Good News Heard about Employment and Higher Unemployment Expectations. April’s 55-point collapse to -93.0 is on par with the depths of the GFC (yellow line). If they haven’t already, consumers will cut back, or eliminate, discretionary purchases. In data to 1978, past inversions in the News Heard-Higher Unemployment Expectations spread of this magnitude saw real discretionary spending contract YoY. April’s 2.8% pace was already a sizeable pullback from Q1’s 4.0%, but it’s clear there’s more to come.

Travel is as discretionary as it gets, but increasing numbers of households are opting for “stay-cations.” Per the TSA, the 90-day average of passenger volume has declined YoY every day since April 2^nd, landing it at a multi-year low of -1.1% YoY (red line). In their first quarter earnings releases, airline executives have publicly worried that customers are hitting the pause button, especially for domestic leisure travel. We already highlighted Southwest CEO Bob Jordan’s recession comments in Friday’s Feather. His counterpart at American, Robert Isom, red-flagged the recent shift in spending behavior: “January came in where we had anticipated, February looked kinda solid, but March and then continuing to April, changed considerably.” As for how to protect margins, “We have many levers at our disposal, such as reducing off-peak flying or, if circumstances require, returning leased aircraft, retiring aircraft, and deferring aircraft deliveries to efficiently reduce capacity without jeopardizing the quality of our core network.” Why share these options with investors unless you realistically see a case for using them?

In Safe, director Todd Haynes renders sunny Los Angeles into a cold and sterile place. “I wanted it to feel like all the air in Safe was recycled, like you were in an airport,” he said in a 2015 interview. Airline executives are praying for busier airports and full flights this summer. Consumers’ growing sense of financial helplessness with Memorial Day only a month out must be keeping them up at night. Like Carol’s illness in Safe, the consumers’ distress will take more than a couple of Advil to fix.

Gene Wilder was as versatile an actor as Hollywood had ever seen. He kept it cool as the boozy gunslinger in Blazing Saddles. He charmed us as a candy man in the children’s favorite Willy Wonka and the Chocolate Factory. And no one can forget his role as a California-born descendant of the mad scientist in Young Frankenstein, insisting his name is pronounced “Frahn-ken-SHTEEN.” Latchkey 1970s kids likely don’t know Wilder was also the voice actor in PBS’s “The Electric Company,” appearing as the title character in the “Letterman” animated shorts in which none other than comedienne Joan Rivers narrated. Episodes cleaved to a pattern: Letterman’s nemesis Spell Binder would change a key letter in a word causing havoc (e.g., people enjoying custard would be served mustard). Letterman was thus prompted to action to replace the incorrect letter with one conveniently placed on his varsity sweater. The situation thus resolved; things returned to normal.

If only the U.S. economy could be addressed so predictably. Were jobless claims the only indicators on a desert island – with initial glued to the low 200,000 range and continuing meandering between 1.8-1.9 million for the last 10 months – we’d conclude the economy is humming along, close to an equilibrium growth rate given layoffs are stuck in a holding pattern. But that’s not what logic dictates when negative signs feature in front of first-quarter U.S. GDP growth estimates. As of yesterday, the Atlanta Fed’s (gold-adjusted) GDPNow stood at -0.4% and S&P Global’s GDP Tracker was at -0.2%.

The second quarter is also at risk. After a 25.1% quarter-over-quarter (QoQ) annualized gain in 2024’s fourth quarter, Existing Home Sales fell at a 3.5% annualized rate in the first quarter. In March, sales fell -5.9% month-over-month (MoM), the steepest decline in three years, putting the jump-off point for the spring quarter in a hole. Second-quarter momentum, March versus the first-quarter average, is running at a pace of about -10% annualized under the winter quarter (blue bars).

What’s to come? Existing sales are closings, reflecting activity one or two months prior. Pending sales, scored as commitments, collapsed in the first quarter, by a left-tail -22.3% QoQ annualized rate (orange bars). This flags depressed brokers’ commissions in coming months. Real estate agents are as “small business” as they come. An income shock is barreling towards Main Street, with discretionary spending in its crosshairs.

On that note, yesterday’s Bank of America’s (BofA) weekly spending update flashed reddest for airlines, the real-time spending on which fell by 13.4% year-over-year (YoY) in the seven days ended April 19^th. As if on cue, following Delta’s lead, American Airlines withdrew its full-year guidance. The Fort Worth-based carrier sees “significant” main cabin weakness into summer. At the other end of the spectrum in BofA’s report, which captured Easter, was an 11.7% YoY gain in Groceries. Danielle’s quip to QI’s Dr. Gates: “Pass the ham. Hold the round trip.”

Thursday’s economic calendar reiterated the theme of collapsing capital expenditures (capex). March headline Durable Goods Orders shot up at a 9.2% MoM but was isolated to the volatile civilian aircraft sector. Core Capex Orders, which exclude defense and aircraft, ticked up 0.1% MoM, a move that was offset by February’s downward revision to -0.3% versus -0.2% prior. This short-run leader of business equipment investment may have posted a decent-sized advance in 2025’s first quarter. But there’s zero momentum headed into the current quarter (lilac bars).

Expect Core Capex Shipments (green bars) to falter into summer, a projection validated by the latest Kansas City Federal Reserve manufacturing survey. In April, the Tenth District’s Future Capex index fell to a net -10, breaking an 18-quarter string of expansion (purple line). The plunge at the second quarter’s outset took out the most recent low point accompanying the 2015-16 Industrial recession, making the 2001 and 2007-09 recessions the only relevant comparisons. The comments from industrial professionals were telling:

• “We have furloughed employees and reduced production hours to help minimize loss. Significant effort being made to gain business and increase revenue.”
• “Lots of supply chain uncertainty. Placing an order with 2-month lead time means we have no idea what tariffs will be in place when the goods arrive in port. It makes business planning and pricing almost impossible.”
• “We will reduce workforce as tariffs take hold. We will also increase prices and pass through to the consumer. It will be a fight to remain open under the present terms and conditions of the current administration.”

We can quantify the qualitative. The rise in the KC Fed’s Future Prices Paid (green line) proxies higher tariffs while the increase in Future Prices Received (yellow line) captures the planned pass-through factor. On the flip side, the falloff in Future Employment (blue line) channels workforce reductions and the plunge in the Future Workweek (red line) represents the potential loss of income.

Or, as Danielle translated that bolded KC Fed quote above, “We’re going to reduce the income available to buy our products and raise the prices of them…and then file Chapter 11.” It doesn’t sound like Letterman is coming to the rescue. Southwest Airlines CEO Bob Jordan agrees. Noting yesterday that the pandemic notwithstanding, he’s never witnessed such a precipitous decline in leisure travel, he boldly said what the NBER is too paralyzed to articulate: “I don’t care if you call it a recession or not, in this industry, that’s a recession.”

The study of the significance of numbers’ potential influence on our lives, is based on the idea that each number has unique energy and resonance defines numerology. Angel numbers, in sets of three, are said to convey transcendence and act as a divine pilot. Randomly choosing 357 rocks – it’s a sign of guidance, progress and positive changes in your life. Decomposing this perfect (random) sequence allows for a more complete understanding. The number ‘3’ represents optimism, growth, and spiritual direction, urging you to embrace new opportunities and trust your intuition. The number ‘5’ signifies change, adaptability, and a new beginning, emboldening you to slap down your insecurities, seize transitions and take risks. The number ‘7’ symbolizes awakening, intuition, and heavenly connection, validating the idea that you’re on the ideal ethereal path.

In surreal 3-5-7 fashion, yesterday’s U.S. economic calendar delivered messages from the Third, Fifth and Seventh Federal Reserve Districts of Philadelphia, Richmond and Chicago. The results, however, pointed to anything but a celestial tract. Starting in the City of Brotherly Love, the Philly Fed non-manufacturing regional activity index fell 10 points to -42.7, the lowest since May 2020. This kind of definitive pessimism was echoed in the 6-month outlook for General Business Conditions – it fell to -23.0 in April, 4.1 points shy of April 2020’s record low. Current Prices Paid rose to a 2-year high of 46.5 reinforcing the facile stagflation narrative.

Back on Planet Earth, a ‘margin squeeze’ emerged when Current Prices Received was added to the mix — it fell to -0.1 in April, setting up the first negative quarter for pricing power in the broader regional economy (orange line). We see no evidence of tariff pass-through to say nothing of the capacity to bolster profits via higher selling prices. Instead, local service firms are reducing headcount. The average of Current Full-Time and Part-Time Employment plumbed to -7.6 thus far in 2025’s second quarter (purple line). Note this is the survey’s fourth quarter instance since its 2011 inception that a negative sign is on display. Assign this driver to the crash in Philly’s firm-level outlook. At -23.0 in April, the second quarter should print in the red for the first time ever (light blue bars).

A short jog down I-95 to the River City suggested that upstream industrial pricing was running counter to the Third Quarter’s signals. The Richmond Fed manufacturing Current Prices Received rose to 2.7% in April from more subdued readings of 1.6% to 1.8% in 2024’s third quarter and 2025’s first quarter (red line). Moreover, factory executives are confident enough to project Future Selling Prices at a rate of 5.6%.

The catch is the forward outlook for demand is an abysmal -26.0 (yellow bars). This is a sea change for a series with a long-run average of 29.5 – and one that didn’t fall into contraction at any time during the Great Recession. In turn, Current Employment prospects fell back below breakeven, to -5.0 in April after a fleetingly hopeful +3.7 in the first quarter after four negative readings throughout 2024 (blue line). Adding insult to injury, with both future inventories measures – Finished Goods (+10) and Raw Materials (+11) – higher than desired, the future supply-demand imbalance will conflict with any tariffs that move through the supply chain.

The service side of the equation from the Richmond District had a similar but different feel relative to the Philly District. In rare form, Future Demand dipped below the zero mark to -2.0 (light green bars). We can count on one hand how many quarters did the same in today’s third chart of the quad. Where Richmond differs from Philly was the lack of capitulation for Current Employment (+8.0 in April, aqua line) in the face of a deteriorating outlook. The disinflationary Current Prices Received expanded at a 3.0% annualized pace, also differing greatly from the direction drawn from the Philadelphia District.

Richmond Fed President Tom Barkin weighed in on the macro situation from the Big Dipper Innovation Summit. He stated that companies “are not – for the most part – firing people, but they are defensive, and that includes things like hiring freezes or postponing investments or delaying, deferring.” The spirit of his comment was captured in the Richmond Fed services Future Employment index. In December, this gauge was at a two-year high of +30. In April, at +1.0, four whole months later, it hit a wall. Both Richmond Future Capex indices for manufacturing (-15) and services (-6) are in full deterioration mode, quantifying Barkin’s observations.

Growth outlooks from the Third and Fifth Districts were reinforced in the Seventh. At -21.4, the Chicago Fed Survey of Economic Conditions (CFSEC) showed current activity across both manufacturing and non-manufacturing moving further below trend thus far in the second quarter (green line). The CFSEC 12-month outlook for the broad U.S. economy was even worse, plunging to -50.0 (lilac bars). The move below trend increases the odds U.S. growth weakened as winter turned to spring. Since Bloomberg’s consensus estimate for first-quarter GDP presently stands at 0.2%, the direction to the risk for the second quarter is obvious.

The number 7 symbolizes the right and righteous path. For some businesses, Chapter 7 is a much less ideal ultimatum. Last week, Deets Mechanical, a Pennsylvania-based HVAC contractor, went down that road. The filing marked a sharp reversal for the company that publicly announced in January expansion and job growth in Western Pennsylvania. Instead, the business is now shuttered and will liquidate its remaining assets endeavoring to repay creditors. This on-the-ground example channels the business survey data illustrations from the 3^rd, 5^th and 7^th Fed Districts that have real businesses and real people behind them.

“Famous Puppeteers for $1,000.” Your Jeopardy answer: “Who is Jim Henson.” Pat Brymer, not so much. Born March 1950 in Highland Park, Illinois, James Patrick Brymer studied theater at Illinois State University for four years before moving to St. Louis to work for Sid and Marty Krofft’s puppet theater at Six Flags Over Mid-America. He collaborated with the brothers on many other projects, including the kids TV series “The Banana Splits” and the “Hanna-Barbera Happy Hour.” Brymer went on to rack up Hollywood credits including “Short Circuit” (1986), “My Stepmother Is an Alien” (1988), “So I Married an Axe Murderer” (1993) and “Team America: World Police” (2004). Before all these successes arrived, Brymer landed what is arguably his biggest claim to fame. Star Wars veteran John Dykstra led the team that built the animatronic Bushwood Country Club gopher that bedeviled perfectly cast Carl Spackler, played by Bill Murray. But it was Brymer as principal puppeteer, who brought him to life as the irrepressible nemesis in the 1980 comedy classic “Caddyshack.”

Murray had it out for the four-legged dancing machine, and there’s no doubt that he wanted to send him to gopher heaven. If he had been playing “Whack-a-Mole,” sadly, his score would have been zero. In the context of yesterday’s S&P Global’s flash purchasing managers’ indices (PMI), Danielle posed to QI’s Dr. Gates, “Do we begin to play Whack-a-Mole country-by-country dictated by the next ‘Truth’ Social post?” It’s a given that PMIs guide cyclical turning points. In that spirit, today’s quad takes a tour around the globe to gauge recession risk in the Euro Area, U.K., Japan and the U.S. In each case, the playing field was leveled using z-scores of Composite (manufacturing and services) Output measured on a current and future basis.

In the Euro Area, Current Output has been running below trend since June 2024 (-0.3 in April, purple line). From a growth standpoint, this stagnation has created a persistent disinflationary backdrop, one where the European Central Bank (ECB) has undertaken 175 basis points (bps) of easing since last June. Over the same timeframe, expectations of Future Output ran close to that of its current counterpart. That changed dramatically in April. Future Output slid below the -1 z-score line, to -1.1, for just the 14^th time since the series 2012 inception (orange line). Past deviations of this magnitude have produced an average Euro Area consensus recession probability of 67%. You’d agree it’s curious that the forecasting community is dreaming of only 30% odds in the next year (blue bars).

To be sure, this is not because of the 50% and 60% recession risks for Germany and France, respectively. The benign stance is attributable to countries outside the core. Thus, we rejiggered the first chart to arrive at the Euro Area excluding Germany and France and found even starker contrast between Current (+0.2) and Future output (-1.0). Complacency is rife in recession probabilities for Italy of 35%, and that of Spain, at a scant 10%. Downside surprises in smaller countries outside the Big Four also cannot be ruled out, which begs the question: “Will the two-to-three quarter-point ECB cuts suffice between now and year end – despite the guidance for expanding defense budgets?”

In the U.K., the z-scores for Current (-1.0, blue line) and Future output (-2.2, red line) are in an even more precipitous position. The outturn for Current coincided with recessionary 2023. The pandemic notwithstanding, the Future figure below the -2 threshold was reserved for the post-Russian invasion period in 2022 and 2016’s Brexit referendum. These observations correlate with shock value. The four other extreme negative readings corresponded to an average U.K. consensus recession probability of 62%, appreciably north of the sell-side 40% likelihood over the next 12 months (yellow bars). Again, we must ask: Are three-to-four 25-bp BoE reductions priced in the swaps market between now and the end of the year, on top of the 75 bps already undertaken since last year, appropriate given the greater recession risk posed by supply chain agents?

A stop in Asia is warranted. For Japan, Current Output has waffled for some time. To that end, in April, Current clocked in at +0.2 z-score (yellow line). The story is in Future Output — March and April arrested the preceding 49-month stretch of above-trend optimism with respective z-scores of -0.2 and -0.6 (green line). This said, despite the change in tone, these are not outliers. For perspective, average z-scores between 0 and -1 have been associated with average recession probability of 28% for the Land of the Rising Sun. The likelihood rises at -1 or below (52% average) and is close to certainty at -2 or lower (83% average). Conclusion: Japan looks fairly valued at its 30% recession probability (lilac bars). A word of caution for the region emerged last night with news that South Korea had unexpectedly succumbed to negative GDP in the first quarter.

Lest we exclude the United States, its Current (-0.7, light blue line) and Future output (-1.1, fuchsia line) are consistent with periods of below-trend activity. The 2015-16 Industrial recession, the 2018-19 U.S./China trade war and 2022’s stunted growth stand out. Readings at -1 or less have garnered 45% recession risk in the past vis-à-vis current expectations of 30% expectation (green bars). Procurement professionals are whispering downgrades to U.S. economists. At least those mutterings best Carl Spackler’s fighting words to a cuddly tunneling expert. S&P Global’s Ben Herzon has heard them and cut his Q1 GDP tracking estimate to -0.1% through yesterday’s new home sales report. Are revenue downgrades next?

You likely think of New York and Los Angeles when you hear ‘Koreatown.’ Curiously, they don’t top the U.S. list. That distinction goes to Bergen County in Northern New Jersey, a short car ride across the George Washington Bridge from NYC. Four small, neighboring towns top the list in terms of percentage of the municipality’s population densities (in ascending order): Fort Lee (23.5%), Ridgefield (25.7%), Leonia (26.5%) and Palisades Park (53.7%). Korean food junkies should be all too familiar with that last one given New Jersey Monthly dubbed its main thoroughfare, Broad Avenue, a Korean food walk of fame: “Signs in both Korean and English announce bars, bakeries, groceries, take-out shops, noodle houses, and bulgogi restaurants. Strips of raw marinated beef, pork ribs, chicken, or seafood are brought to your table with a variety of well-suited condiments and vegetables, including kimchi, the staple spicy pickled cabbage.” Is your mouth watering at the mouth-watering possibilities?

No surprise, Palisades Park proprietors are just as tariff terrified as any Main Street small business. Their home country relatives are sharing in their anxiety. April’s first-20-day figures for South Korean imports fell 11.8% year-over-year (YoY, lilac line), while the 20-day export numbers were down 5.2% YoY (purple line). The combined performance was the weakest in 14 months. According to the Observatory of Economic Complexity, South Korea ranked as the fifth largest global exporter in 2023. Historically, April’s compression on both sides of South Korea’s trade ledger has accompanied significant economic upheaval (lilac and purple dashed lines):

• 2007-09 Great Recession
• 2011-13 Euro Area recession
• 2015-16 Global Industrial recession
• 2018-19 U.S./China trade war

Economists are underpricing that risk. Recession probabilities via Bloomberg for the U.S., Euro Area, Japan and China were 30%, 30%, 30% and 15%, respectively. Even recession expectations for South Korea, at 25%, favor expansion over contraction.

Asian trade flows aren’t the only scorched tea leaves. The Equipment Leasing & Finance Foundation’s (ELFF) Monthly Confidence Index gauges confidence in the $1.3 trillion equipment finance sector. At 40.8, the U.S. metric has tumbled to the lowest level since October 2023. Moreover, the speed of the decline over one-, two- and three-month timeframes ended April clocked respective records of -16.2, -25.0 and -27.7 points.

ELFF’s soundbite: “Turbulent times…doom and gloom mixed with increased opportunities. Tariffs could lead to higher prices for parts and equipment. They also will result in ‘creative’ financing opportunities to help borrowers protect cash flow and offset higher prices for goods. Once you get past the fear, it’s an exciting time to be in equipment finance.” Will this schizophrenic take carry into May? About half the survey responses were submitted prior to the ‘Liberation Day’ tariff announcement on April 2^nd.

The higher beta ELFF index leads capital expenditures and purchasing manager activity. To that end, the sharp reversal in ELFF (blue line) flags the consensus call for Wednesday’s S&P Global U.S. manufacturing PMI falling to 49.0 in April vs. 50.2 in March which is directionally correct, but shy on magnitude (red line).

The upstream equipment leasing sector also guides nonresidential construction. F.W. Dodge’s construction contracts series, seasonally adjusted by the Conference Board, is in the throes of capitulating. The January/February downward momentum in new projects in commercial and manufacturing buildings slumped to an eight-year low (lime line). If equipment finance confidence is any indication, we’ll see more downside yet in two months’ time.

Validation was on display in the U.S. index of leading indicators (LEI), which pointed to a continued extension of the down cycle in construction contracts. While roundly disregarded for far too long, we must note that the LEI, which hit -0.7% March vs. -0.5% consensus estimate, just posted the biggest month-over-month drop in two years. While the last 20 years have seen turning points in the LEI (fuchsia line) vary vis-à-vis inflections in the F.W. Dodge series, the direction is once again clear – the bottom isn’t in for commercial and manufacturing construction.

At a higher level, financing conditions won’t be coming to the rescue. Per the Dallas Fed’s Banking Conditions Survey, ELFF’s ‘creative’ financing opportunities should be happening on smaller business loan books. Through April, net commercial real estate (CRE) loan demand backslid to a zero reading from the net +10.5 optimism just two months prior (green line). At -6.4, commercial and industrial (C&I) loan demand showed an even larger turnabout in April relative to December’s local high of +12.4 (yellow line). In one Survey special question, lenders in the Eleventh District indicated they expected credit standards and terms to put the squeeze on borrowers over the next three months. For CRE, 23.7% anticipated tightening versus 3.4% who foresaw easing. For C&I, 21.7% looked for tightening compared to just 1.7% calling for easing. Business loan demand suggests that conduits for business investment expansion are narrowing.

From the macro in the Lone Star State to the micro, Fiber Optics 2.0 promises to exert extra pressure on the construction pipeline at very wide margins. On Monday, Wells Fargo Equity Research published: “Data Centers: AWS Goes on Pause.” It would seem that Amazon Web Services is following Microsoft’s lead. As the Wells analysts wrote: “Over the weekend, we heard from several industry sources that AWS has paused a portion of its leasing discussions on the data center colocation side (particularly international ones).” On that note, we hope you haven’t lost your appetite for Korean BBQ.

In July 1994, Alvin Straight left his hometown of Laurens, Iowa, and began the 240-mile journey to Blue River, Wisconsin, to see his brother who had just suffered a stroke. At the time, Alvin was 73 and had no driver’s license, so he took the one mode of transportation he had available: a John Deere riding lawn mower. Towing a jury-rigged trailer filled with food and supplies, Straight kept to highway shoulders, creeping along at less than ten miles per hour. The trip was not without hiccups. At one point, the mower broke down and required repairs, while at another he ran out of money and had to wait for his next Social Security check. But the stubborn Straight was undeterred, eventually making it to his brother’s house after more than a month. The adventure inspired the wonderful 1999 film The Straight Story, starring Hollywood veterans Richard Farnsworth, Sissy Spacek, and Harry Dean Stanton.

The Philadelphia Fed’s April Manufacturing Business Outlook Survey crossed the wires this past Thursday morning, and the story behind the data was as straightforward as it comes: No Bueno. Responses to the survey were collected from April 7-14, in the aftermath of the White House’s initial “Liberation Day” announcement and the manic adjustments to the policy that followed. Philly firms made clear their preference to wait out the current uncertainty. Notably, the diffusion index for current activity collapsed 39 points to -26.4, its worst print in two years and well below the +2.2 consensus. Also on display was a growing supply-demand imbalance, as the New Orders-Inventories spread fell from 14.4 to -33.3, a cycle low with just one (non-pandemic) precedent: May and June 1980 (orange line). The driver of this deep inversion was the complete capitulation in New Orders, which sank 42.9 points to -34.2, their worst (non-pandemic) print since March 2009.

The retreat in demand relative to supply is a bright red flag for factory sector employment. The average of the Philly Fed’s Future Employment and Future Workweek indices has already been in retreat every month this year, sinking from January’s 27.7 to April’s -0.9, the first negative print since January 2023’s -2.6 (purple line). Given the magnitude of the New Orders-Inventories imbalance, more employers are likely to follow Volvo’s lead, which late last week announced plans to lay off 800 workers across three plants in Pennsylvania, Virginia, and Maryland.

Recall that the Philly Fed region is the nation’s chemicals hub, and thus leads the industrial supply chain. Given the weakness on display in the Third District, we would expect to see declining employment needs (expressed through job openings) in the most manufacturing-intensive states relative to the rest of the nation, which the top right chart delineates. At present there isn’t much distinction between the two, as both have been contracting on a year-over-year basis since August 2022. Their respective -13% year-over-year (YoY) and -14.6% YoY prints are now on par with early 2008 levels, which eventually nose-dived that fall post-Lehman. That being said, remember that the JOLTS data are delayed, with February the most recent month available. Expect cracks to form come the release of the March and April numbers, with openings in the more manufacturing-intensive states breaking first (fuchsia line).

Shifting gears to housing, it was a similar, straightforward story of downward momentum in the March housing starts data released by the Census Bureau last Thursday. Things were particularly troublesome for Single-Family Starts, which sank 14.2% month-to-month to a 940,000 seasonally adjusted annualized rate (SAAR), the steepest sequential decline since April 2020 (aqua line). QI friend David Rosenberg had an insightful observation that, “Weather was not an issue… one would have thought we would be seeing a big push of replacement buildings in the aftermath of those horrible early-year SoCal fires, but starts in the West cratered 31% MoM and are down by nearly 9% on a YoY basis.” A look at the bottom-left chart makes clear that both Single-Family Starts and Permits are tracing an M-shape, and are now coming down from a second peak that failed to match the local high from early 2024.

While Single-Family Permits sank to a four-month low, Multifamily Permits actually jumped 9.3% MoM, which should continue to fuel rental inflation relief as more supply comes online. Last week’s update to the Cleveland Fed’s New Tenant Rent Index sent 2025’s first quarter to -2.2% YoY from 1.0% YoY in 2024’s last three months (red line). Notably, the shorter-run, two-quarter annualized rate of change is falling even faster, at a stout -7.9% (yellow line). In data back to 2005, this is a record two-quarter decline, taking out the Great Recession low of -4.9% from 2009’s second quarter.

New home sales figures for March are due this Wednesday, with the consensus penciling in a 680,000 seasonally adjusted annualized rate, roughly in line with last month’s 676,000 print. Color us skeptical given a recent Redfin release. Per their calculations, homes that went under contract in March were on the market for an average of 47 days, the longest for any March since 2019. Meanwhile, just 27% of homes sold over list, the lowest March total since 2020. Even as more supply comes online, particularly in Sunbelt suburbs and exurbs that saw massive in-migration following the pandemic, buyers have not been enticed to move off the sidelines. Mortgage rates aren’t helping, with Freddie Mac reporting an average 30-year of 6.83% in the week ended April 17, up 21 basis points from the week prior. Neither is tariff policy uncertainty, with a recent Redfin survey indicating that 24% of Americans are planning to scrap making a major purchase (auto, home, or otherwise) as a result, with another 32% going into “wait-and-see” mode. Though we should be in the throes of the busy spring season, all signs point to the risk of housing breaks down, just like Alvin Straight’s John Deere rider mower.

“After climatologist Jack Hall is largely ignored by U.N. officials when presenting his environmental concerns, his research proves true when a superstorm develops, setting off catastrophic natural disasters throughout the world. Trying to get to his son, Sam, who is trapped in New York with his friend Laura and others, Jack and his crew must travel by foot from Philadelphia, braving the elements, to get to Sam before it’s too late.”

Rotten Tomatoes summary, The Day After Tomorrow

For 20 years, The Day After Tomorrow held the record of the highest opening weekend for a natural disaster film until 2024, when it was dethroned by Twisters. Audiences spoke with their wallets but were split on their takeaways. A small Rotten Tomatoes sampling sided with The New Yorker Anthony Lane’s panning, “A shambles of dud writing and dramatic inconsequence which left me determined to double my consumption of fossil fuels. Matthew Rozsa of salon.com countered with, “‘The Day After Tomorrow’ deserves to be seen – and, if humanity fails to thwart climate change, preserved like that Gutenberg Bible.”

Hollywood’s 2004 depiction of climate change featured siphoned air from the upper troposphere that flash freezes anything caught in the eyes of massive cyclones with temperatures below -150 degrees Fahrenheit. April 2025’s New York Federal Reserve’s Business Leaders Survey, covering the highest intensity service sector state depicted next level climate change. The current business climate index fell to -60.7 in April, a level reserved for recession. The -50.0 reading for its future climate counterpart emitted an ear-piercing echo. The pandemic notwithstanding, at -38.9, the three-month decline in the former, at -38.9, was only exceeded in September 2007, three months prior to the Great Recession onset. In the case of the latter, the -63.2-point collapse since January has no precedent.

Altered business climate is one thing. Changed business behavior is quite another. Follow through from the tectonic moves is manifest in the heart attack suffered by the capex and employment outlooks. Future Capex plumbed to a recessionary -21.7 in April from March’s -3.9 (orange line). The rare move into negativity for the Future Employment index to -5.4 ups the probability for New York to lead in job losses and higher unemployment (blue line).

Abrupt deterioration in key cyclical markers in the Fed’s Second District was not isolated. The National Association of Home Builders (NAHB) sported a collapse in its Future Sales index. In the last three years, builder expectations have so gyrated, that this last move makes for a quadruple dip. From a technical standpoint, the prior two were “higher lows,” suggesting a healing. The latest plunge, however, broke support as Future Sales dropped from 66 in December to 43 in April (lime line). The bigger news, though, was that the 23-point compression has no equal outside of the involuntary movements accompanying the pandemic’s rush ashore (purple line). So violent was the four-month crash, it dwarfed the 2000s housing bust.

Overshadowing souring homebuilder and service sector were U.S. consumers front-running tariffs. Lofty expectations for March’s Retail Sales report were realized with the 1.4% headline lining right up with the consensus estimate. Details of the report clearly displayed a demand pull-forward. Discretionary Retail Sales, excluding food & beverages, health & personal care, and gasoline, surged by 2.1% month-over-month (MoM), the stoutest in two years and seven times the long-run average of 0.3% MoM. Such a right-tail outcome amidst an environment of rapidly deteriorating consumer expectations and financial market volatility is unsustainable.

Weakening NAHB homebuilder expectations coupled with the sharp pullback in home goods’ buying conditions from the University of Michigan (UMich, red line) tell you the 2.2% MoM gain in home goods sales, including furniture & home furnishings, electronics & appliances, and building materials, are poised to reverse. As a microchannel check, the average stock prices of big-box home improvement retailers, Home Depot and Lowe’s (green line), have tracked buying conditions in recent years. November’s topping and subsequent reflect the risk embedded in consumer forward guidance.

Auto sales were the biggest standout. Were a trend line drawn to 2010 to capture the long-run path for nominal motor vehicle turnover, five of the last six months ended March would come in above trend (not illustrated). The magnitude of pull-ahead flags the good news from this sector likely having run its course, which struck a chord given a local Toyota dealership’s TV ad in Dallas is hawking 0% financing for 72 months. As with home goods, UMich provides forward guidance via its gauge of auto buying conditions (yellow line). Contrasting the upside from unit auto sales (aqua line), the proper read-through is the danger of a cliff effect for auto sales is high. Compounding this threat is tightening lending standards as banks get shellacked with soaring consumer loan delinquencies and charge-offs.

A “Day After Tomorrow” disaster, hailing a new ice age, is not priced in. Fed Chair Powell stressed yesterday that “our obligation is to keep longer-term inflation expectations well anchored and to make certain that a one-time increase in the price level does not become an ongoing inflation problem.” So obtuse was the congenial chair, a PRO incredulously asked, “Is this guy fighting yesterday’s war?!” By the time first quarter GDP hits on April 30^th, in FOMC Blackout ahead of his May 7^th podium call, to say nothing of April payrolls, due out May 2^nd, also in Blackout, Powell’s whiplash will have him in a neck brace.

As proud wordsmiths and students of the business cycle, we’re naturally drawn to “word cycles.” Also known as “rotograms” or “bicycles,” word cycles are simply reversible compound words. The two halves can be placed in either order to create entirely different terms. In 1969, the periodical Word Ways’ David Silverman vaguely introduced the concept in three-word and two-word formations. He caveated that the former are “harder to come by” and the latter are “downright scarce.” A year later in the same publication, Faith Eckler begged to differ with Silverman: “It is unfortunate that Mr. Silverman does not define the criteria for a valid word cycle, for it would then be easier to give examples. Should the resulting two pairs of words both be entered as a single word in Webster’s Unabridged Dictionary, as BOATHOUSE and HOUSEBOAT? If so, bicycles are not hard to find, e.g., SHOTGUN and GUNSHOT, or HUNTSMAN and MANHUNTS.”

Today, it’s all about the OUTLOOK. You get where we’re going! Viewpoints from three distinct audiences – global investors, regional manufacturers, and U.S. consumers – concur on the path forward. The future hit a wall in April, as in flip OUTLOOK, add a space between the words and LOOK OUT!

Warren Buffett is a good place to start. In his annual newsletter, the 94-year-old billionaire investor said he would “never prefer ownership of cash-equivalent assets over the ownership of good businesses.” In February, the Financial Times featured his record cash stache that’s approaching $350 billion (blue bars). Unruffled by still-high valuations, the famed investor continues to trim his equity holdings in favor of the safety of Treasury bills. Time will have to wait for Buffett to once again mine the value that is the hallmark of his legendary and long investing history. For perspective, Buffett is sitting on enough cash to buy 476 companies in the S&P 500. That’s one eye-opening way to quantify the sheer buying power of a man patiently sitting on the sidelines and waiting this one out.

According to Bank of America’s Global Fund Manager Survey (FMS), Buffett might want to keep cooling his heels. The top tail risk, ‘Trade War Triggers Global Recession,’ soared to 80% in April (orange bars), the highest conviction for any top tail risk tallied in the FMS since Michael Hartnett and his team began publishing the monthly report 15 years ago. This critical mass of investors centering their collective anxiety around the same fundamental concern suggests a self-fulfilling narrative. Peering through a different lens, ZEW economic expectations measured from institutional professionals at “banks, insurance companies and financial departments of selected corporations” corroborates. ZEW is one of Germany’s leading economic research institutes, but it also measures sentiment across other parts of the globe.

April’s collapse has been concurrent as the trade war amped up. The U.S. figure for economic expectations plumbed to a record low of -71.5 from -48.7 in March and +1.3 in February, taking out January 2001’s previous low point of -71.2 in the process (green line). No surprise, in the crosshairs as they’ve been, China’s macro outlook also dropped sharply, to -38.1 from March’s +8.0 (orange line). The Euro Area was not to be left out — the forward view for the Continent plumbed to -18.5 from an eight-month high of +39.8 previously (aqua line). Importantly, the -50-point swing for the U.S. in March was closely mimicked for China in April (-46.1-point delta) and dwarfed by the Euro Area (-58.3-point delta). Both suggest there’s ‘catching down’ to do as the U.S. fell another -22.8 points in April.

The first look at forward guidance from the industrial supply chain was similarly downbeat. While the headline Empire manufacturing index came in slightly ahead of the consensus estimate (-8.1 vs. -13.1), it was the future that was perceived as grim. The New York Fed indicated that firms in the Second District saw a worsening in economic conditions in coming months at “a level of pessimism that has only occurred a handful of times in the history of the survey. The index for future general business conditions fell twenty points to -7.4; the index has fallen a cumulative forty-four points over the past three months.”

General business conditions don’t capture their company-specific counterpart. By marrying the five future components of New Orders, Shipments, Employment, Delivery Times and Inventories and assigning them ISM weightings of 20% each, the only rivals to April’s 47.8 occurred during the month of 9/11 (45.7) and at the depths of the Great Recession from January 2009 (45.6), February 2009 (45.9) and March 2009 (46.2). While not sub-50, another standout, as opposed to being outstanding, was March 2023’s 49.9 on the heels of regional banking turmoil.

As for consumers’ outlooks for business conditions, Friday’s University of Michigan (UMich) print stripped away uncertainty and replaced it with unambiguity. Breaking down the UMich component of consumer sentiment revealed a clear swing from optimism to pessimism. Those responding “good” dropped to 14% in both March and April, near past cycle lows (yellow line). After peaking at a record 52% in October, “uncertain” has subsequently fallen every month, crash-landing to 20% this month (red line). “Bad” surged to 66%, a recessionary read (light blue line). While the National Bureau of Economic Research hems and haws, their true task should be seeing through any tariff-induced demand-pull-forward in today’s Retail Sales and Industrial Production lest their own outlooks leave them screaming, “Look Out!”