Morning Brew March 17 2025

Good morning,

MICHAEL CEMBALEST • J.P. MORGAN wrote on Equities: Here’s the interesting thing about the stock market: it cannot be indicted, arrested or deported; it cannot be intimidated, threatened or bullied; it has no gender, ethnicity or religion; it cannot be fired, furloughed or defunded; it cannot be primaried before the next midterm elections³; and it cannot be seized, nationalized or invaded. It’s the ultimate voting machine, reflecting prospects for earnings growth, stability, liquidity, inflation, taxation and predictable rule of law.

Despite a strong move up Friday- the  Dow +1.65%, S&P 500 +2.1% and the Nasdaq 2.6% - the Week ended negative again with the Dow giving up 3.1%, the S&P 2.3% and the  Nasdaq -2.4%.

The University of Michigan survey showed consumer sentiment plummeting to its most pessimistic level in nearly two years and one-year inflation expectations spiking to 4.9% the highest in 30 years

Yields remain calm at 2.87 for Europe an d4.3% in the Dollar Index is holding at 103.75 with EURUSD at 1.0880, Cable at 1.2937 and USDJOY 148.90. Gold and Silver are surprisingly calm ahead of key levels. Gold broke the 3000 for the first time Friday, I had expected either a strong reversal or a FOMO move, so far that has not happened, we are at 2988 and 33.82.

Bitcoin remains in limbo at 83k

• U.S. President Donald Trump said he plans to speak to Russian President Vladimir Putin on Tuesday and discuss ending the war in Ukraine
• US Secretery of Treasury Scott Besset stated there were no guarantees there will not be a recession
• China repors an improvement in industrial output and retail sales and announces stimulus measures.

   

• British Prime Minister Keir Starmer said on Saturday European nations and Western allies were ready to step up support for Ukraine
• U.S. President Donald Trump launched large-scale military strikes against Yemen's Iran-aligned Houthis on Saturday over the group's attacks against Red Sea shipping, killing at least 31 people
• Serbia and South Korea hit by demonstrations
• Berkershire Hathaway increases it`s stake in Japanese trading Houses.

This week will be dominated by Central Bank decisions with the US, UK, Japan and Switzerland the most important ones. Actions are expected by the SNB (cut) and The Banco Do Brazil (hike)

Today US Retails sales will give an indication on US Consumer spending, expected at 0.6% after -0.9% last month,,

Thursday, the Swiss National Bank will announce its next interest rate decision. Interest rate traders expect a 75% probability of a 0.25% rate cut to 0.25%. The SNB's inflation target is below 2%, and with the current annual inflation rate at 0.32%, there is certainly room for a rate cut. Further steps will likely depend on developments in the coming months, as is the case with almost all central banks.

The interest rate markets are already very volatile. Last week, 10-year European interest rates had the largest daily jump since 1998. Since December, we have risen from 2.02% to 2.90%, and Swiss 10-year yields have also moved from 0.2% in December to 0.85%, more than quadrupling. US interest rates have risen and then fallen during the same period. We are close to the level of early December 2024 at 4.3%. The euro exchange rate against the US dollar was already seen at parity, now 1.10 seems to be in focus. The Swiss franc has lost value against the euro but has gained against the USD. At the beginning of the year, EURCHF was at 0.94 and USDCHF at 0.9075 – today 0.96 and 0.8840. Trump's erratic policies are changing the world, and the expected investments in infrastructure and defense are making an impact.

The interest rate decision should not have a dramatic impact on long-term yields or exchange rates. However, savers will receive less or even no interest on deposits, leading to increased demand for alternatives to savings accounts. This could very well boost demand for stocks, including through ETF savings plans.

We are still at 5 hour time difference between CET and Ney York so Market open is 14:30, FX Options expire at 15:00 and mey events often at 13:30 CET

Monday, March 17, 2025

• China Retail Sales,
• US Retail Sales
• Earnings: Townsquare Media, Inspired Entertainment, SAIC, Sonida Senior Living, Diversified Energy, Quarterhill, FibroGen, Sangamo Therapeutics, Open Lending, Quanterix
  
  

   

  Tuesday, March 18, 2025

          •       Eurozone: ZEW Economic Sentiment Index (Mar).

          •       Germany: ZEW Economic Sentiment Index (Mar).

• Italy: Balance of Trade (Feb).
• US Import Prices
• Canada CPI
• US Industrial Production
• Earnings: StoneCo, Maravai LifeSciences, Waldencast, HealthEquity, Surf Air Mobility, Inovio Pharmaceuticals, OmniAb, ZTO Express, Absci

  Wednesday, March 19, 2025

• Japan: BoJ Interest Rate Decision.
• Indonesia: Interest Rate Decision.
• US Rate decision
• Earnings: General Mills, Williams-Sonoma, Signet Jewelers, Five Below, Kingsoft Cloud, Tencent

Thursday, March 20, 2025

• China, Sweden, Switzerland UK Rate decisions
• U.S.: Initial Jobless Claims (Mar 15), Philadelphia Fed

• Nike, Accenture, FedEx, Micron Technology, Pinduoduo

• Sweden Riksbank Rate decision

Friday, March 21, 2025

• Japan CPI
• U.K.: Retail Sales MoM/YoY (Feb).
• Canada: Retail Sales MoM/YoY (Jan).
• Russia: Central Bank Interest Rate Decision.