Earnings beats don’t buy belief while the tariff shock just hit China's streets

Unloved earnings

The tape’s telling the truth-Q1 earnings are lighting it up-but it doesn’t feel like a victory lap. With over 75 % of S&P 500 names in the confessional, EPS growth is running at a scorching +12 %, twice the whisper consensus, and margins have surprised on the upside. Top-line beats are modest but solid. Yet traders aren’t tossing confetti; they’re tossing bricks.

Beats earn a lukewarm 76 bp pop on average, well below the historical 100 bp kicker, while misses get clobbered for 300 bp, versus the usual 200. It’s a stark reminder that this market rewards fear more than fundamentals. Why the frost? Because guidance is almost nonexistent-only 17 % of companies issued Q2 outlooks, and most full-year plans stick to “steady as she goes,” as if execs are flying blind through tariff fog. Some admit they haven’t even baked in potential tariff hits. That’s not prudence; it’s plausible deniability.

Take Apple: a $900 million tariff drag on this quarter’s results, and it sits heavy on forward multiples. No one’s paying up for earnings when half the year could turn into a policy minefield.

Cue sell the Dollar and buy Gold

Cross-asset flows are eerily predictable: dump the dollar, buy gold as Asia opens. Maybe it’s exporters front-running local FX strength, or maybe traders are sniffing out a coordinated easing under the trade-détente façade. The tariff boogeyman is back in the closet, but this market still trades every headline like a referendum on global risk.

Q1 earnings were a knockout, no doubt-but the market’s behaviour makes it clear that forward momentum hinges on fresh visibility, not rear-view beats. Until guidance emerges from the shadows-and Q2 outlooks prove resilient-single stock rallies run on borrowed confidence. July earnings could be a whole different tune.

The tariff shock just hit China’s streets

The ripple effects of President Trump’s tariff blitzkrieg are now boiling over into the streets of China-not in boardrooms or state-owned media soundbites, but in the form of raw worker unrest. What started as a macroeconomic chess match is hitting ground level with surgical precision, and it’s the Chinese factory floor that’s bleeding.

With nearly 15% of China’s exports previously U.S.-bound, the 145% tariff wall now in place isn’t just a tax-it’s a wrecking ball. American buyers have slammed the brakes. Orders are drying up. Raw materials are backlogged or rerouted. And the once-reliable workaround-transshipping via Vietnam and Southeast Asia-is getting plugged as the U.S. tightens rules of origin and probes circumvention.

Factories are shuttering in droves, caught between collapsing U.S. demand and insufficient alternate markets. Workers are being cut loose without pay or warning. And Beijing’s playbook of silence and state-managed spin isn’t holding. Enter the flashpoint: worker protests.

From Hunan’s Dao County to Sichuan’s Suining and all the way to Inner Mongolia’s Tongliao, social media is lighting up with footage of strikes, shutdown notices, and unrest. One viral clip shows hundreds of workers outside Shangda Electronics chanting “Strike! Strike!” as security stands down. This isn’t scattered dissent-it’s coordinated outrage.

And the timing is no accident. The compound pressure of U.S. tariffs, global demand slowdown, and rising domestic costs is hitting a politically sensitive nerve. Xi’s administration has been leaning hard on the “dual circulation” strategy-stimulate domestic demand, reduce foreign dependency-but the cracks are showing. China’s core export engine still relies on scale manufacturing, and the U.S. is still its most profitable market. When that tap gets torqued shut, no amount of ASEAN pivoting or internal consumption talk will plug the hole.

Labour unrest in China-a subject typically omitted from official narratives-is now surfacing via alternative channels.

Remember that FT nugget we flagged last month-“Chinese factories slow production and send workers home as US tariffs bite”? Well, the bite is now turning into a full-blown hangover. Tariffs front-loaded in Q1 punched a hole in import flows; now export lines are feeling the squeeze as knock-on effects cascade through Asia’s supply chains. PMI readings have slid deeper into contraction territory, while shipping volumes out of Shanghai ports crater. Domestic ripple effects are showing up in soft commodity demand, muted credit growth, and slumping upstream industrial metals.

This isn’t a dress rehearsal-it’s the show, and the real pain lands in China’s hinterland before it loops back into global price action. U.S. equity bulls may cheer “peak-tariff” headlines, but the true cost shows up in shrinking margins for exporters, slower corporate capex, and cautious guidance from firms still flying blind on trade policy. When the factories pause, global demand signals flicker red-next up, watch Asia FX and commodity plays for the early warning sentinels. Tariffs aren’t just a U.S. story; they’re a boomerang, and right now it’s smacking foreign producers-and the market-square in the face.