Morning Brew March 30 2023

Good Morning,

Risk sentiment in equities continues to surges with all sorts of reasons being cited. In my view, technical are looking good, there is no more direct panic from the banking crises, people have money to invest and the outlook by some companies is surprisingly good while at the same time, interest rates are off the highs and inflation seems to be receding.

The recession and world-end fears have so far not materialized. I am not convinced the rally is justified but the trend is strong while it holds.

The US500 is trading above the psychologically important 4000 mark and the GER40 breached the 15300. Both leave further room to the upside.

US 2 year rates remain lower at 4.1% as the chances for a further hike by the fed are at 50/50 for 25BPS or no action, by December it is expected that rates will be app 50 bps below the current level.

The USD Index is rangebound between 102.40/80 with the major crosses little moved over night, EURUSD 1.0840, GBPUSD 1.2325 and USDJPY 132.540. Gold hasn`t moved that much and trades at 1862 while Silver is higher and testing the 23.50. A breach would open the way to 24.

Bitcoin tested the 29k over night and was rejected again.

Several business leaders including Elon Musk are suggesting a development moratorium for AI for 6 months to develop a regulatory framework.

Today we are awaiting the EU business climate and economic sentiment as well as the German inflation data at 11 and 14:00 ahead of the US employment and final GDP at 14:30.

Let us see if the optimistic sentiment holds – I remain optimistic but without serious conviction (meaning stops or put options to secure the positions)

Thursday, 30 March

• EU Business climate
• Germany CPI (Mar P)
• US Initial Jobless Claims (25-Mar)
• US GDP (Q4 T)
• US Treasury Secretary Yellen and Fed’s Barkin speak

Friday, 31 March

• Japan Jobless Rate (Feb)
• Japan Tokyo CPI (Mar)
• China PMIs (Mar)
• UK GDP (Q4 F)
• France CPI (Mar P)
• Italy CPI (Mar P)
• Eurozone CPI (Mar P)
• US PCE (Feb)
• US Univ. of Michigan Sentiment (Mar F)

Earnings on watch this week:

• Wednesday: Constellation Software, Cintas, Paychex
• Thursday: Kweichow Moutai, Great Wall Motor, H&M