Morning Reads
- Asia Economies to Keep Growing Despite China Slowdown, Other Headwinds, ADB Says
- US Ramps Up Ties With Japan, Philippines to Counter China at Sea
- Russia Destroys Largest Power Plant in Ukraine’s Kyiv Region
- Oil Rally Is Driving Texas Gas Prices Below Zero
- The Airline Industry’s Biggest Climate Challenge: A Lack of Clean Fuel
- Lufthansa Halts Tehran Flights After U.S. Warns of Imminent Attack on Israel by Iran
- Cocoa’s Surge Is Drawing Africa’s Farmers Back to the Bean
- Why Nigeria’s Currency Rebounded and What It Means for the Economy
- WTO’s Forecasts for Global Trade Are Clouded by Political Uncertainty
- Global Watchdog Welcomes Reform Proposals for Swiss Banking
- Swiss Banking Plan Leaves ‘Relieved’ UBS Out of Immediate Firing Line
- Soft Landing or No Landing? Fed’s Economic Picture Gets Complicated
- Fed Rate Cuts Are Now a Matter of If, Not Just When
- Bond Traders Are Preparing for a 5% Yield, No Rate Cut World
- Tax Deadline Is Pivotal for Funding Markets, Fed’s Balance Sheet
- Is the Boom-and-Bust Business Cycle Dead?
- ‘I Cannot Afford to Live’: Gen Z is Full of Financial Angst Despite Inheriting A Golden Job Market
- The Hidden Costs of Homeownership Are Skyrocketing
- UnitedHealth Chair, Executives Sold $102 Million in Stock Before US Probe Became Public
- Goldman’s Carey Halio Set to Replace Berlinski as Treasurer
- Donald Trump’s Stock Has Lost More Than Half Its Value Since Going Public
- Publicis Flags Tech Rebound as Revenue Growth Beats Expectations
- ‘Made for Advertising’ Websites Are the Marketing Industry’s Latest Messy Situation
- Meta’s Ad Woes May Push Marketers to Move Their Messages Elsewhere
- Spotify to Let Users Play DJ, Competing With Remixes on TikTok
- Uniqlo Owner Raises Profit Forecast After First-Half Profit Rose on Overseas Growth
- Givaudan Posts Higher Sales Amid Strong Momentum
- Now Arriving at an Airport Lounge Near You: Peloton Bikes, Nap Pods and Caviar Service
- Fitch Cuts China Outlook to Negative on Steady Rise in Debt
- EU Shifts Attention to Industry in Push to Deliver Green Targets
- Egypt’s Gas Shortfall Will Shake Up Sleepy Markets
- $200 Billion of M&A Wasn’t Enough in US Oil Patch
- The Politics of a Steel Deal Hangs Over Biden’s Japan Summit
- How the US Steel Takeover Became About Biden and Swing States
- Price of Gold, Seen as Hedge Against Inflation, Soars to New Heights
- Why the Frog Has Yet to Be Boiled by High Rates
- March Inflation Data to Prolong Drama Around Fed Rate-Cut Timing
- Why ‘Tokenizing’ Assets Is Turning Banks On to Crypto
- Barred Morgan Stanley Banker Joins Firm That Got His Trading Leaks
- U.S. Postal Service Proposes Raising Stamp Prices Again
- US Weighs Ban on Charging Homebuyers for Lender Title Insurance
- Where Does the Best Innovation Happen? Not in Stand-Alone Labs, Some Companies Say
- Apple’s India iPhone Output Hits $14 Billion in China Shift
- Jack Ma Praises Alibaba’s Leadership, Restructuring in Rare Memo
- Musk’s Undisclosed Starlink Costs Undercut Profitability Claims
- US, Japan to Announce Plans to Send Japanese Astronaut to Moon
- Toyota Aims to Beat Hyundai and Ford With Its All-New 4Runner
- Chinese EV Maker XPeng Makes Inroads in Hong Kong, Macau
- Norfolk Southern Settles Derailment Suit for $600 Million
- Decaf Is the Hottest Thing in Coffee Right Now
- Starbucks Is Designing Quieter Stores to Make Sure It Gets Your Order Right
- Blizzard and NetEase Settle Their Beef, Returning Warcraft to China
- Roblox Users Battle Tornadoes and Raise Pets. Will They Watch Ads, Too?
Movers
Options
PREMIUM
Prepper
Riddled with rates
What goes on six in the morning, three at midday, one in the evening, and possibly none at night? Traders trying to play the legendary Oedipus are up against that riddle posed by the Federal Reserve as rate cut predictions continue to dwindle for 2024. The latest Consumer Price Index has reinforced more hawkish expectations after accelerating to an annualized 3.5% in March, or an amplified 0.4% M/M, while elevated core figures are also a cause for concern.
Decipher me or be devoured: Each successive number is adding to the picture being assessed by the data-dependent Federal Reserve. It's now looking increasingly likely that the "last mile" of the inflation fight will be the most challenging, with a higher for longer theme coming into view due to "sticky" inflation. Economic growth is also strong at the moment, so the central bank doesn't feel intense pressure to cut rates. However, policymakers also don't want to risk falling behind the curve again, like they did at the beginning of the latest cycle, and may have to act earlier than expected to pull off a so-called soft landing.
Some Fed officials even warned that recent increases in inflation "had been relatively broad-based and therefore should not be discounted as merely statistical aberrations," according to the minutes of the last FOMC meeting on March 19-20. That indicates there were at least some policymakers who didn't hold the view that the hot January and February inflation data was a "bump" on the path to the Fed's 2% inflation goal. With regards to quantitative tightening, officials also started discussing a process to slow the balance sheet runoff, which the Fed has indicated would be "fairly soon."
Market movement: As inflation continues to run hot and rate cut expectations get pushed further out, Treasuries all over the curve made some big moves on Wednesday. The yield on the 2-year note soared more than 22 basis points to trade near 4.97%, while the 10-year yield climbed 19 bps to top 4.55%. Stock market indices fell back, with the Dow Jones Industrial Average shedding over 400 points, as well as losses for the S&P 500 and Nasdaq. It can also mean some choppy trading for the near future, just as the first-quarter earnings season kicks off on Friday. Check out the latest SA commentary on the CPI report here.
Water standard
Compliance with the first-ever U.S. rule to limit "forever chemicals" in drinking water is expected to cost about $1.5B annually, according to the EPA, although an industry body expects the cost to be more than three times the amount. While American Water Works (AWK) and California Water Service (CWT) are prepared to meet the new standards, they are both pursuing government funding to mitigate compliance costs. Also a great call by Investing Group Leader Courage & Conviction Investing, who flagged Arq (ARQ) last August and how it can benefit from the proposed framework. Since then, the stock has returned over 250%. (3 comments)
Swipe away
Credit card delinquency rates reached their highest level on record in Q4 2023, according to the Federal Reserve Bank of Philadelphia. "Firms recording the worst 30+, 60+, and 90+ account-based days past due levels," the report said, warning that stress among cardholders was underscored in payment behavior and further performance deterioration could be on the horizon. Meanwhile, mortgage originations declined to a series low as market headwinds continued to stifle demand, including housing affordability. (14 comments)
Mideast tensions
Barreling through the $80-level only two weeks ago, WTI crude oil (CL1:COM) is on watch as it heads closer to $90/bbl. The upward march was sparked in part by reports that an attack on Israel by Iran and its proxies was imminent, though things got a little wobbly after a hot CPI and a build in U.S. crude oil stockpiles. The head of the U.S. Central Command, General Michael Kurilla, will land in Israel today to hold consultations with Defense Minister Yoav Gallant. Yesterday, President Biden said the U.S. commitment to "Israel's security against these threats from Iran and its proxies is ironclad." (42 comments)
Today's Markets
In Asia, Japan -0.4%. Hong Kong -0.3%. China +0.2%. India closed.
In Europe, at midday, London -0.3%. Paris -0.2%. Frankfurt -0.6%.
Futures at 7:00, Dow -0.3%. S&P -0.3%. Nasdaq -0.2%. Crude -0.7% to $85.60. Gold +0.3% to $2,354.90. Bitcoin +2.1% to $70,362.
Ten-year Treasury Yield +2 bps to 4.56%.
Today's Economic Calendar
8:30 Initial Jobless Claims
8:30 Producer Price Index
8:45 Fed's Williams Speech
10:30 EIA Natural Gas Inventory
12:00 PM Fed's Collins Speech
1:00 PM Results of $22B, 30-Year Bond Auction
1:30 PM Fed's Bostic Speech
4:30 PM Fed Balance Sheet
Companies reporting earnings today »
What else is happening...
President Biden still expects a rate cut before the end of the year.
Report: DOJ opens probe into Nippon's deal for U.S. Steel (X).
Meta (META) unveils latest custom-made chips for AI workloads.
TikTok's divestiture timeline may undergo extension in Senate.
Jack Ma backs Alibaba (BABA) restructuring efforts in rare memo.
Safety officials interview Boeing (BA) again on 737 door plug blowout.
Fitch flags Medicare utilization trends ahead of managed care earnings.
DOJ files complaint against Regeneron over Eylea Medicare pricing.
Paramount (PARA) directors to exit the board amid merger talks.
Big boost: Costco (COST) raises quarterly dividend by 13.7%