Morning Reads
- How the BOJ’s Plan for a Smooth Exit from Negative Rates Unraveled
- ECB Could Cut Rates in June if Inflation Continues Easing, Lagarde Says
- Indonesia’s Central Bank Stands Pat as Expected, Fed Decision Looms
- Inflation Fears Bloom for the Fed’s Rite of Spring
- Fed to Give Fresh Clues on Path of Interest-Rate Cuts
- US Crypto Firms Paying $300,000 Wages Leave Foreign Peers Behind
- Finma Plans Stress Tests at UBS After Scrutiny on Lender Rises
- BlackRock Ditched by Texas Fund Shows Limits of Fink Persuasion
- Tech Giant Linked to France’s Cybersecurity Tumbles in Value
- Google Fined Roughly $270 Million in France Over Dispute With News Publishers
- Apple Keeps Losing Patent Cases. Its Solution: Rewrite the Rules
- US Weighs Sanctioning Huawei’s Secretive Chinese Chip Network
- Intel Gets $20 Billion in US Grants, Loans for Chip Plants
- The Global Effort to Make an American Microchip
- Hiring Booms at SpaceX and Blue Origin Making It Hard for NASA to Attract Talent
- Boeing Sees Massive Cash Drain as 737 Max Episode Takes Toll
- Nikola’s Rollout of Hydrogen Trucks Is Hitting Supply-Chain Hurdles
- China’s MG Motor Venture Bringing Electric Sports Car to India
- Why Mainland Chinese Flocked to Hong Kong’s New Global Visa
- Lonza to Buy U.S. Manufacturing Facility From Roche For $1.2 Billion
- HP Is Turning Printers Into a Subscription
- To Catch Retail Thieves, This Unlikely Duo Treats Them Like the Mob
- Luxury Stocks Fall After Gucci Owner Kering Warns of Sales Drop
- Shohei Ohtani, the Dodgers’ $700 Million Man, Will Transform Baseball—If He Wants To
- For Women’s Basketball, Caitlin Clark’s Lasting Impact May Be Economic
- Communist Cuba Is on the Brink of Collapse
- Hong Kong Security Law Could Damage City’s Standing as Financial Hub
- China Evergrande Founder Accused of Exaggerating Revenue by $78 Billion
- Japan Ends Era of Negative Rates With Few Clues on Further Hikes
- South Korea Finance Sector Pledges $313 Billion in Green Funding
- Oil Stays Near-Four Month High But Russia Export Uptick Weighs
- Biden’s Climate Law Has Created a Growing Market for Green Tax Credits
- How the Top Oil Trader’s Brazen Corruption Was Caught on Tape
- Warren Urges Powell to Cut Rates to Help Struggling Clean Energy
- The Fed Is Playing a Waiting Game on Rate Cuts. The Rules Are Starting to Change
- The Fed Has a Lot of Questions to Answer About Its Balance Sheet
- Email ‘Mistake’ on Inflation Data Prompts Questions on What Is Shared
- Why Are Americans Still Down on the Economy?
- Wall Street Bonuses Slump to 2019 Low After Dealmaking Drought
- UBS Powers Past $100 Billion a Year After Credit Suisse Fall
- Congress Should Think Bigger Than TikTok Ban, Tech Critics Say
- Nvidia Unveils Successor to Its All-Conquering AI Processor
- For These Companies, It Feels Good to Be in Nvidia’s Orbit
- Nokia Tells Reddit It Infringes Some Patents in Lead-Up to IPO
- Xiaomi’s Fourth-Quarter Profit Rose on Higher Smartphone Sales
- Super Micro Offers to Sell 2 Million Shares After Market Rally
- How One Company Navigated a Boom and Bust With No Mass Layoffs
- United Airlines CEO Tries to Reassure Customers that the Airline Is Safe
- Ben & Jerry’s Owner Loses Its Taste for Ice Cream
- Wonder, Marc Lore’s Food-Delivery Startup, Raises $700 Million
- A New Chapter for Sports Illustrated, With Plans to Keep Print
OPTIONS
PREMIUM
Prepper
The Federal Reserve is taking center stage today, and with inflation proving stickier than expected, the central bank finds itself balancing between a hawkish and dovish view. While the policy-setting FOMC is widely expected to hold interest rates steady at the 5.25%-5.50% range for a fifth straight meeting, the bigger item to watch will be the so-called dot plot. Policymakers will update their rate and economic projections for the first time since December, potentially deviating from the three rate cuts they previously penciled in by the end of 2024.
Snapshot: A months-long standoff between markets and the Fed has drawn to a close, as a slew of economic data in recent weeks has reinforced the monetary authority's case for caution. In January, fed funds futures traders had priced in six to seven quarter-point rate cuts by the end of the year. Now, with inflation falling slower than expected, traders see three reductions starting in June or July, aligning with the Fed's December Summary of Economic Projections.
Earlier this month, Fed Chair Jerome Powell emphasized in congressional testimony that the central bank’s inflation battle has made good progress towards its 2% goal, though "just a bit more evidence" is needed before implementing the first rate cut. "We're not far from it," he declared at the time, setting up investors to pay close attention to any follow-up commentary in today's post-meeting press conference at 2:30 PM ET. Reporters may ask how the combination of this year's sticky inflation prints and weaker retail sales data affects his thinking, while taking into account the central bank's dual mandate of stable prices and full employment.
Risk of acting too late: Should the Fed make a hawkish shift, markets will take that as a higher-for-longer stance, which could be interpreted as "higher-until-recession," according to SA analyst Damir Tokic. Logan Kane also sees a risk of a recession, citing state-level economic data from the Philly Fed, and other figures from high-income countries that show their business cycles are ahead of the U.S. and suggest that the global economy is cooling. For another take on the rate dilemma, check out Fed Must Risk A Small Recession Now by Investing Group Leader James Kostohryz. (14 comments)
Cutting the burrito
What do you do when your company's stock price is worth thousands of dollars? Implement a 50-for-one stock split. The news, which sent shares of Chipotle (CMG) up 6% in premarket trade, will be subject to shareholder approval at its annual meeting on June 6. If approved, the company's shares are expected to begin trading on a post-split basis on June 26. Chipotle also announced a special one-time equity grant for all restaurant general managers as well as crew members with more than 20 years of service. (35 comments)
Silicon rush
The U.S. government is awarding Intel (INTC) about $20B in grants and potential loans, which includes up to $8.5B in direct funding through the CHIPS and Science Act. All that money will advance Intel's commercial semiconductor projects across Arizona, Ohio, New Mexico and Oregon. "It's a huge deal," Secretary of Commerce Gina Raimondo declared. "It means bleeding-edge semiconductors made in the USA, keeping the USA in the driver’s seat of innovation." It also follows Intel's plans to invest over $100B in America over five years to boost domestic chipmaking capabilities critical to emerging technologies like AI. (9 comments)
Going private
New ownership in the retail space? It sure looks like. Two major department store chains are exploring private options against a backdrop of macro challenges and low foot traffic. Nordstrom's (JWN) founding family has been involved in several reports, while Macy's (M) might be going down a similar route. The latter has even opened its books to Arkhouse and Brigade Capital to allow due diligence that could lead to a raised take-private offer. High inflation is another factor in the decision making, with budget-conscious consumers shopping at discount retailers such as T.J. Maxx (TJX) and Burlington (BURL).
Today's Markets
In Asia, Japan closed. Hong Kong +0.1%. China +0.6%. India +0.1%.
In Europe, at midday, London -0.1%. Paris -0.6%. Frankfurt +0.2%.
Futures at 7:00, Dow -0.1%. S&P -0.1%. Nasdaq +0.1%. Crude -1.3% to $81.63. Gold -0.1% to $2,156.60. Bitcoin -0.1% to $63,008.
Ten-year Treasury Yield -2 bps to 4.28%.
Today's Economic Calendar
MBA Mortgage Applications
10:00 Atlanta Fed's Business Inflation Expectations
10:30 EIA Petroleum Inventories
2:00 PM FOMC Announcement
2:30 PM Chairman Press Conference
Companies reporting earnings today »
What else is happening...
Unilever (UL) to separate ice-cream business, slash 7,500 jobs globally.
Dividend watch: JPMorgan Chase (JPM) raises dividend by 10%.
Planet Fitness (PLNT) faces boycott over transgender incident.
Slowing EV shift: Fuel economy ratings scaled back; emissions next.
JetBlue (JBLU) reduces flights to focus on 'bread and butter' routes.
Super Micro Computer (SMCI) issues clarification after CEO interview.
Huang: Nvidia will gain larger data center share than other firms.
Intel (INTC)-backed Astera Labs (ALAB) prices IPO at $36 per share.
Boeing (BA) mulls sales of defense assets to bolster balance sheet.
Saudi Arabia plans to create $40B fund to invest in AI technology.