Traders Market Weekly: War, Inflation and Central Banks

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    April 7, 2024 FEAR NOT Brave Investors Where have we been and where are we going? Join our weekly market thread on Traders Community… A little Chilly
    [See the full post at: Traders Market Weekly: War, Inflation and Central Banks]


    Equity indices in the Asia-Pacific region were mostly higher Monday, posting modest gains.

    China’s Shanghai Composite was a notable laggard (-0.7%), coming back from the extended holiday.

    Japan’s Nikkei: +0.8%
    Hong Kong’s Hang Seng: +0.1%
    China’s Shanghai Composite: -0.7%
    India’s Sensex: +0.7%
    South Korea’s Kospi: +0.1%
    Australia’s ASX All Ordinaries: +0.2%

    Treasury Secretary Yellen continued her meetings with Chinese officials, highlighting concerns about excess capacity in some industries, like EVs and solar panels, and warned about support for Russia’s war on Ukraine.
    China’s Construction Bank asked Hong Kong court to liquidate property developer Shimao because of outstanding debt obligations.
    Bloomberg reported that the People’s Bank of China increased its gold reserves for the 17th consecutive month.
    China’s March FX reserves $3.246 trln (expected $3.210 trln; last $3.226 trln)

    Philippine central bank kept its key policy rate unchanged at 6.50%. Th

    February wage income 1.8% (expected 1.8%; last 2.0%);
    February Current Account JPY2.644 trln (expected JPY3.112 trln; last JPY0.438 trln);
    March Economy Watchers Current Index 49.8 (expected 51.6; last 51.3)

    January Home Loans 1.6% month-over-month (expected 2.3%; prior -0.9%)


    Major European indices are mostly higher, sporting modest gains on the heels of Wall Street’s nice move on Friday following the March employment report.

    STOXX Europe 600: +0.3%
    Germany’s DAX: +0.6%
    U.K.’s FTSE 100: +0.2%
    France’s CAC 40: +0.6%
    Italy’s FTSE MIB: +0.6%
    Spain’s IBEX 35: -0.1%

    Some better-than-expected investor confidence data for the eurozone and a stronger-than-expected industrial production report for Germany have helped contribute to the positive disposition.
    April Sentix Investor Confidence -5.9 (expected -8.3; last -10.5)
    The ECB policy meeting on Thursday is a focal point as market participants increasingly expect a nod in the directive to a likely rate cut in June. That view has been helped by a recent ECB poll, according to Bloomberg, that suggested companies in the eurozone are expecting a slowdown in wage growth.

    February Trade Balance EUR21.4 bln (expected EUR25.1 bln; last EUR21.4 bln);
    February Industrial Production 2.1% m/m (expected 0.6%; last 1.3%)

    March Unemployment Rate 2.3% (expected 2.2%; last 2.2%)


    Taiwan Semiconductor Manufacturing (TSM 143.92, +2.56, +1.8%): Arizona and U.S. Department of Commerce announce up to $6.6 billion in proposed chips act direct funding, the company plans third leading-edge fab in phoenix

    Boeing (BA 181.50, -1.64, -0.9%) and Southwest Airlines (LUV 28.13, -0.21, -0.7%): FAA will investigate what happened with Southwest Airlines Flight 3695

    Coinbase Global (COIN 254.80, +13.90, +5.8%): rising alongside cryptocurrency prices. Bitcoin is at $72,339

    Apple (AAPL 169.01, -0.57, -0.3%): agreed to EU demand over music applications

    Spirit Airlines (SAVE 4.43, 0.0, 0.0%): reached an agreement with Airbus (EADSY) to defer all aircraft on order that are scheduled to be delivered in the second quarter of 2025 through the end of 2026 to 2030-2031

    Applied Materials (AMAT 211.00, +3.15, +1.5%): upgraded to Overweight from Neutral at Cantor Fitzgerald; tgt $260



    Dow 38,892.80 -11.24 -0.03%
    S&P 500 5,202.39 -1.95 -0.04%
    Nasdaq 16,253.96 5.44 0.03%
    VIX 15.19 -0.84 -5.24%
    Gold 2,357.20 11.80 0.50%
    Oil 86.51 -0.40 -0.46%


    Italy Updates Economic Projections:
    Cut GDP forecast for 2024 to 1% v 1.2% prior
    Confirms deficit-to-GDP ratio 4.3% in 2024
    Sees 2025 deficit at 3.7% of GDP
    Cuts 2024 debt-to-GDP ratio to 137.8% v prior 140.1%
    Sees 2025 debt at 138.9% of GDP


    Early Bonds:
    U.S. Treasuries saw modest buying overnight in front of Wednesday’s March #CPI
    $119 billion of new supply this week, starting with today’s $58 billion 3-yr note auction

    2-yr: -2 bps to 4.77%
    3-yr: -2 bps to 4.58%
    5-yr: -2 bps to 4.41%
    10-yr: -3 bps to 4.39%

    USD/JPY is nearing 152.00 (currently 151.82), which is stirring speculation about a likely intervention by Japan’s Ministry of Finance to stem the slide against the dollar.


    Microsoft Corp will invest about $2.9 billion over the next two years to boost its artificial intelligence (AI) business in Japan, the Nikkei newspaper reported on Tuesday citing the company president.

    The U.S. tech firm will announce the plans soon when Japanese Prime Minister Fumio Kishida visits the United States, the Nikkei said in its interview with Microsoft President Brad Smith.

    Under the plan, Microsoft will install advanced AI semiconductors at two existing facilities in eastern and western Japan, the report said.

    The company also plans to announce an AI-related reskilling program in Japan to train 3 million workers over three years, and to set up a new lab in Tokyo for research and development on robotics and AI, the


    Equity indices in the Asia-Pacific region were generally mixed on Tuesday, although Japan’s Nikkei (+1.1%) outperformed with the help of its semiconductor components.

    Japan’s Nikkei: +1.1%
    Hong Kong’s Hang Seng: +0.6%
    China’s Shanghai Composite: +0.1%
    India’s Sensex: -0.1%
    South Korea’s Kospi: -0.5%
    Australia’s ASX All Ordinaries: +0.5%

    Nikkei (+1.1%) outperformed with the help of its semiconductor components. Prime Minister Kishida to visit the White House on Wednesday and will reportedly be aiming to bolster Japan’s relationship with the U.S., including cooperation on semiconductors. With USD/JPY nearing 152.00 (currently 151.77), lots of speculation that Japan’s Ministry of Finance could soon intervene to stem the slide in the yen, which is at a 34-year low against the dollar.
    Bankruptcies in Japan hit nine-year high at end of March, according to Nikkei.
    Japan’s March Household Confidence 39.5 (expected 39.6; last 39.0); Machine Tool Orders -8.5% yr/yr (last -8.0%)

    Australia’s business confidence continued to slump in April.
    March NAB Business Confidence 1 (last 0); April Westpac Consumer Sentiment 82.4 (last 84.4)

    New Zealand
    NZIER Q1 Business Confidence -25% (last -2%)
    Reserve Bank of New Zealand is expected to leave its official cash rate unchanged at 5.50% at tonight’s policy meeting,

    South Korea
    President Yoon is attempting to draw chip makers to South Korea with multi-billion dollar incentives, according to Korean press report,


    Major European indices are mostly lower, sporting modest losses with participants lacking conviction in front of the U.S. CPI report on Wednesday and the ECB policy meeting on Thursday.

    STOXX Europe 600: UNCH
    Germany’s DAX: -0.6%
    U.K.’s FTSE 100: +0.1%
    France’s CAC 40: -0.3%
    Italy’s FTSE MIB: -0.4%
    Spain’s IBEX 35: -0.2%

    ECB is expected to leave its official policy rates unchanged but expectations are rising that the ECB will signal a rate cut at its June meeting.
    That sentiment was likely helped with the ECB’s Bank Lending Survey, which revealed a slump in business loan demand in the first quarter.

    February Trade Balance -EUR5.2 bln (expected -EUR7.0 bln; last -EUR7.2 bln)


    Alphabet (GOOG 157.20, +1.06, +0.&%): aiming to expand in house chip production, according to WSJ
    Tesla (TSLA 173.16, +0.22, +0.1%): settled lawsuit over 2018 Autopilot crash, according to WSJ; sold 89,064 China-made vehicles last month, according to Cnevpost
    Applied Materials (AMAT 209.90, +0.86, +0.4%): might scale back plant plans, according to SF Chronicle
    UBS (UBS 31.03, -0.12, -0.4%): mulling Credit Suisse China stake swap with government in China, according to Bloomberg
    Harmonic (HLIT 12.19, -0.95, -7.2%): CEO Patrick Harshman to retire; Nimrod Ben-Natan named new CEO; concludes strategic review of Video business; guides Q1 revs in-line
    Methode Electronics (MEI 12.58, 0.0, 0.0%): announces that CFO Ronald Tsoumas is retiring on July 12; The company has begun a search process with the assistance of a leading executive search firm to identify permanent successor


    Early Market
    Dow 38828.36 -64.44 (-0.17%)
    Nasdaq 16311.28 +57.32 (0.35%)
    SP 500 5205.98 +3.59 (0.07%)
    10-yr Note +26/32 4.377
    NYSE Adv 1636 Dec 974 Vol 83 mln
    Nasdaq Adv 2393 Dec 1464 Vol 895 mln

    Industry Watch
    Strong: Communication Services, Real Estate, Materials, Information Technology, Utilities, Energy, Consumer Discretionary
    Weak: Financials, Industrials

    Moving the Market
    — Relative strength in mega cap stocks and chipmakers
    — Drop in market rates
    — Wait-and-see in front of Wednesday’s release of the March Consumer Price Index


    HOLY BIDENOMICS … MARCH INFLATION still hotter than FOMC desires (3.5% yoy)
    WALL STREET indexes down about 1% as some sector costs rose more than expected in MARCH
    Equities have improved some after initial SHOCK of -500 PLUNGE on DOW


    Dow 38,461.51 -422.16 -1.09%
    S&P 500 5,160.64 -49.27 -0.95%
    Nasdaq 16,170.36 -136.28 -0.84%
    VIX 15.68 0.70 4.67%
    Gold 2,348.60 -13.80 -0.58%
    Oil 86.28 1.05 1.23%

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