Breakfast Bites - Thu May 11, 2023

Ayesha
May 11, 2023
2 min read

Rise and shine everyone.

The big news today for the US are the Producer Price Index number released at 8:30am ET. The CPI numbers came in lower than expected yesterday and it’s likely we see a cooler PPI number as well. But, there are still some areas that are accelerating below the surface.

Futures largely flat after US equities finished mostly higher on Wednesday with upside leadership from select big tech helping the Nasdaq close at its best level since late last August. Bonds, Gold and the US Dollar are marginally higher. Copper dropped over -2.5%. Oil and Bitcoin remain weak.

There seems to be some renewed fear in Regional Banks with the KRE ETF dropping over -2% in pre-market trading.

Asia and Australia

Asian equities trading mostly lower Thursday in a quiet session. Japan set to close mixed with the Nikkei flat and Topix slightly lower. Australia closed slightly down. Mixed in Greater China as Hong Kong and Shanghai dip, Shenzhen gains a little.
China’s inflation came in lower than expected. PPI fell 3.6% y/y in April, weaker than expectations of a 3.3% decline. Follows 2.5% drop in the previous month for the weakest reading since May 2020. - The level of spending that was expected post re-opening isn’t coming in as expected. Spending levels are still lower than 2019.
China's new loans fell to CNY719B ($103.7B) in April from March's CNY3.89T, and forecasts of CNY1.4T in another blow to country's economic recovery path.
Big miss in SoftBank after Thursday's market close, posting FY net loss JPY970.14B vs FactSet consensus JPY402.87B, though revenue was nearly in line.

Europe, Middle East, Africa

European markets were trading slightly higher but now, largely flat.
The Bank of England raised rates by 0.25% and signaled further rate hikes. Updated macroeconomic forecasts show a terminal rate of 4.75%.
ECB's Nagel this morning said two more rate hikes are likely ahead of the summer break. Would imply deposit rate of 3.75% ahead of summer break. Recall, Wednesday evening sources suggested ECB mulling September hike also. Would imply deposit rate of 4%.

The Americas

Markets remain hopeful US lawmakers can avert default despite little progress so far on talks
Blackstone in talks with large regional banks about lending partnerships
Weekly Mortgage purchase applications rise 5% w/w as rates drop
Chevron to ramp up Venezuelan production next month after signing oil-for-debt swap last year
Microsoft tells employees it won't raise salaries for full-time employees this year
Disney beat on fiscal Q2 revenues and operating income. Takeaways mixed. The more positive commentary revolved around the continued strength at Parks, improving DTC losses, traction behind cost-control initiatives in DTC, 20% sequential growth in domestic Disney+ ARPU. Reiterated guidance for reducing its overall cost structure by at least $5.5B. The more cautious commentary revolved around the unexpected ~300K decline in Disney+ US subscribers. The stock was down after hours and in the pre-market.

Calendars

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