Erik Schafhauser Zürich Erik Schafhauser Zürich Erik Schafhauser Zürich

Morning Brew May 14 2024

Morning Brew 1 minute to read
Erik Schafhauser

Senior Relationship Manager

Summary:  Meme Stocks are back - waiting for US Inflation data


Good morning,

It was basically a calm day yesterday BUT from a gambling perspective it was a great day as AMC regained focus - with all the good stuff like trading halts and wild swings. Cause was the return of Roaring Kitty to X after three years of silence. AMC rose as much as To be sure, this has n% to close. This has nothing to do with fundamentals and is highly dangerous to trade.

Indexes moved little at the end of the day but we are seeing a lot of news out of the AI space that could be market moving. Google is holding its developer conference today and OpenAI announced a new version capable of realistic voice conversation and able to interact across text and images. Also worth noting is that the S&P 500 is not far from an all-time high, we are only 50 points away.

Walmart is cutting jobs in corporate according to the Wallstreet journal.

Ten Year yields seem stuck below 4.50 and the USD index is meandering the 105.30. EURUSD is 1.0785, GBPUSD 1.2550 and USDJPY 156.44.

Gold and Silver gained to 2344 and 28.40.

Today and tomorrow will be busy days with tomorrow the key (US CPI and Retails Sales) but today also the German Inflation, the ZEW Index, US PPI and comments by Jerome Powell.

Our Strats Team  looked at how markets are likely to react tomorrow, it is noteworthy that the range of analyst expectations is extremely tight. For the Monthly Core CPI , the High estimate among 64 analysts is 0.4% the lowest 0.3%.

“How will markets likely react? Three consecutive months of higher-than-expected inflation prints have undermined confidence that inflation is on the right track. As we approach the release of April data, market participants are looking for signs that might persuade the Federal Reserve to consider cutting interest rates before the US election in November. Despite prices for goods continue to decline, gasoline prices rose to a six-month high while services costs have remained sticky. As a result, headline CPI is likely to rise faster than core CPI. A monthly increase of 0.4% in headline inflation implies that the three-month annualized CPI rate might decrease to 4.1%, but there could be a slight increase in the six-month annualized rate to 4%. Such figures would likely do little to bolster Federal Reserve members' confidence in starting to normalize monetary policy, thus potentially delaying expectations for rate cuts. Currently, bond futures are forecasting cuts totalling 41 basis points by December. However, an upside surprise in inflation data could lead to a reassessment to 25 basis points cuts or fewer, whereas a downside surprise might lead markets to forecasts two rate cuts by year end.”

Besides economic data, Sino-US trade remains worth watching. The US is expected to announce higher tariffs on various Chinese goods, China n turn asked local manufacturers to avoid Nvidia chips.

In the Middle East fighting remains intense and US Secretary Blinken visits Ukraine.

I think it is likely we will see some volatility over the next few days!

Tuesday
- Data Canada Leading index, DE HICP & ZEW . UK Labor data, US PPI, Jerome Powell & Lisa Cook speak
- Earnings: Alibaba, Home Depot, Sony
Wednesday
- Data Sweden PPI, EU GDP, US CPI& Retail Sales, Neil Kashkari & Michelle Bowman speak
- Earnings: Cisco,

Thursday
- Data JP GDP, AU Unemployment Rate, Initial Jobless claims & Philly Fed, Michael Barr , R. Bostic & Partick Harker speak
- Earnings: Walmart, JD.Com Under Amour

Friday
- Data China Retail Sales, EU HICP

 

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