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Breakfast Bites - Fri May 19, 2023

Rise and shine everyone.

Happy Friday!

The big news today is the discussion between Fed Chair Powell and former Fed Chair Bernanke at 11am ET. This should be an interesting one not, just for the markets at the moment but also to hear what Bernanke has to say about Powell trying to unwind the years of QE that Bernanke vehemently pushed forth.

Deere just reported before market. Results were fantastic and they raised guidance. EPS came in at $9.65 vs. $8.47 est. and Revenues increased 33.6% YoY to $16.08 bln vs the $14.87 bln.

We had quite the rally in the market yesterday with the SPX crossing 4200 and hitting a year-to-date high. The Nasdaq as well hit a year-to-date high closing +1.81% on the day and +3.42% on the week. S&P futures up 0.1% in Friday morning trading. Gold, Copper and Oil are all trying to recover somewhat, while the Dollar Index is pulling back slightly after rallying yesterday.

Asia and Australia

  • Asian markets mostly higher overnight with Japan at 33-year highs, though Greater China lagged again with Hong Kong down nearly 1.5%.

  • BOJ's Ueda vows to maintain easy monetary policy given economic uncertainty

  • Japan nationwide core inflation rebounded to an in-line 3.4% in April from 3.1% in March. Food inflation spiked to 9.0% from 8.2%, though ex-food and energy measure rebounded to a 41-year high of 4.1% from 3.8% in prior month.

  • US dollar strength to blame for yuan weakness, says state-owned China newspaper as yuan set for biggest loss in three months; China state banks seen swapping yuan for dollars in forwards market, says dealers

  • Breakup of Alibaba begins with spinoff of $12B cloud unit, logistics next

Europe, Middle East, Africa

  • European equity indexes higher Friday. Financial Service, Basic Resources and Construction/Materials lead; Real Estate and Telecom lag.

  • ECB reportedly stepping up scrutiny of EU lenders' liquidity reserves and may tighten requirements amid policy tightening.

  • UK government reveals long-awaited £1B semiconductor strategy

  • Q1 reporting season in Europe in final stages. Latest Refinitiv I/B/E/S sees Stoxx 600 earnings seen growing 7.3% in Q1, a big turnaround vs 2.5% expected around four weeks ago. This season has shown resilient consumer demand, supported by excess savings and a strong labour market, however, outlook for the rest of the year remains unclear.

  • ECB pledges to keep rates in restrictive territory as long as possible to meet inflation target

  • German producer prices post first monthly increase since September 2022 - increasing by +0.3% MoM.

The Americas

  • Walmart reported a double beat with an increase in same-store sales. Margins were down but improving on a sequential basis. Inventory was down 9.4%. Guidance was below consensus.

  • Fed officials split over whether to pause in June or maintain tightening bias

  • Apple will offer ChatGPT for iOS through the App Store

  • Disney cancels $1B investment in Florida that would have brought 2K jobs to the region

  • BofA strategist says sell US stocks as tech and AI bubble forming and Fed hikes may not be over yet

  • Debt ceiling resolution could lead $1T in T-bill sales, which could drain liquidity from banking system, raise short-term rates

  • Icahn admits bearish bet against market cost his firm $9B over past six years


(news taken from Reuters, FT, Bloomberg; Calendar from Trading Economics)


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