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Breakfast Bites - Tue May 9, 2023

Rise and shine everyone.


We saw the Senior Loan Officer Opinion Survey yesterday confirm the tightening of lending conditions. Commercial Real Estate lending is tightening at a faster rate than other loans and as Mayhem pointed out, loan demand has fallen to the lowest since the Great Financial Crisis.

We also got the NFIB Small Business Optimism Index this morning - it fell to 89 in April of 2023, the lowest since January of 2013, from 90.1 in March, and compared to forecasts of 89.6.


And President Biden is set to discuss the debt ceiling with Speaker McCarthy today but, a decision is not likely.


The US Futures are looking weaker this morning. Dollar index up 0.1% with Gold. Bitcoin futures up 1% after falling more than 7.5% in prior session but still remains below $28,000. WTI crude down 0.8% after bouncing more than 2.5% on Monday. Bonds are slightly firmer.


Asia and Australia

  • Asian markets ended mixed Tuesday. Japan markets closed higher with a broad-based gain, Taiwan also up as trade data suggested its export contraction may be bottoming. Elsewhere mostly lower. Hong Kong fell sharply in the afternoon session, mainland markets also reversed a positive opening. South Korea slightly lower. Southeast Asia mixed, India holding early gains.

  • China saw a massive drop in Imports. -7.9% drop in imports vs consensus 0.0% and prior month's -1.4% decline. Contributors included weaker coal, copper and natural gas

  • BOJ Governor Ueda says YCC will end if inflation target is achieved in sustainable manner

  • Australian government to unveil Federal Budget on Tuesday evening. Budget to show return to surplus in 2022/23, a ~A$40B turnaround from deficit predicted in October 2022

  • China's foreign ministry said it would expel a Shanghai-based Canadian diplomat as reciprocal countermeasure after Canada expelled Chinese diplomat for allegedly targeting one of its lawmakers.

Europe, Middle East, Africa

  • European equity markets softer. UK markets reopen after Monday's public holiday. Real estate, energy the worst performers; media and travel do better

  • BoE will hike rates by 25bps this week to 4.5% given UK CPI readings, highest rate level since 2008.

  • Sweden's largest CRE landlord SBB.B-SE announced plans to halt payment of its dividend and scrap a planned share issue in the wake of S&P Global on Monday cutting its long-term credit rating for SBB to BB+ from BBB-

  • Industrial production in Germany fell -3.4% MoM from +2.1% in the prior month.

The Americas

  • Goldman Sachs and Barclays are warning investors that the Fed is unlikely to cut rates the way the market is pricing in.

  • Treasury bills starting to reflect risk of non-payment from June onward

  • Private equity portfolio companies in the US are on track in 2023 to see the highest annual number of bankruptcies since 2020

  • Google to pay New York Times ~$100M over three years as part of broad deal that allows it to feature NYT content on some of its platforms

  • PayPal warns on operating margin as payments volume tops forecasts

  • Occidental began buying back Berkshire Hathaway's $10B of preferred stock in March

  • Disney expands federal lawsuit against Florida's DeSantis, accusing him of a "retribution campaign”

Calendars

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




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