Read on the Trading Floor - 07 May 2024
Today’s focus… CB speak, tensions in Middle East, Earnings and much more
Macro Themes At Play
Theme 1 - Higher for Longer
Theme 2 - Ceasefire?
Theme 3 - Xi in Europe
Theme 4 - Earnings continue to hit the tape
Further reading and listening of note
Theme 1 - Higher for longer
RBA... "inflation continues to moderate, but is declining more slowly than expected"
In that vein, Fed's Barkin and Williams once again danced to the beat of the "higher for longer" theme track. Fed continue to indicate its on hold or cuts … its a very high bar for a hike.
However, in Europe, its a completely different story with cuts from the ECB in June still firmly on the table and the market pricing an 80% chance of a cut from the Riksbank tomorrow (but is there a risk they disappoint?)
Econostream - ECB’s de Cos: Should Cut Rates in June if Inflation Outlook Confirmed
Bloomberg - Bank of England Should Tailgate the ECB, Not the Fed
Steno Research - TRADE ALERT: GETTING OUT OF SCANDI-FX BEFORE THE RIKSBANK HOLD
ING - Riksbank preview: A hawkish cut amid currency concerns
Theme 2 - Ceasefire?
Israeli troops have moved into Rafah to take control of the Egypt/Gaza border crossing. As a result, the weekend hope of a potential ceasefire was extinguished. Biden/Blinken may push again for further talks but for now both sides, Hamas and Israel remain far apart.
FT - Gazans’ hope turns to dread as Israel begins Rafah assault
Axios - Rafah assault threatens to be Israel breaking point for Democrats
Bloomberg - Israel-Hamas War Latest: Israel Rejects Gaza Cease-Fire Plan Accepted by Hamas
Reuters - Gaza ceasefire uncertain, Israel vows to continue Rafah operation
Bloomberg - Biden, Netanyahu to Speak as Israel Tells Gazans to Leave Rafah
Theme 3 - Xi in Europe
China needs a strong consumer for its manufactured exports; thus, it needs Europe and the US to buy them. At the same time, Europe needs a strong German manufacturing industry to propel growth. As an EV price tariff war bubbles on the horizon, both trading partners need to make sure the other is resilient and they avoid unnecessary damage to longer term relationships. Furthermore, Ukraine and the security risk to Europe is key for EU leaders and Xi remains an essential stakeholder given his trading relationship with Moscow.
Steno Research - GREAT GAME – PEACE OR NO PEACE?
FT - Xi’s visit stress-tests Macron’s plans for a sovereign Europe
Bloomberg - Xi Visits Europe: Chinese President Urges Macron to Help Avoid a ‘New Cold War’
FT - Xi lashes out at Nato over 1999 Belgrade bombing ahead of Serbia visit
Theme 4 - Earnings continue to hit the tape
Nintendo teases a new switch to take the attention away from softer sales, Palantir struggles to roll out their AI platforms abroad, UBS return to profit and BP maintain their buybacks despite missing estimates....
Fortune - Nintendo teases the Switch’s long-awaited successor
Morningstar - Palantir Earnings: AI Platform Drives Strong Start to 2024
Bloomberg - Palantir Beats Sales Estimates, Raises Outlook on AI Enthusiasm
FT - UBS reports stronger than expected profit in first quarter
Bloomberg - UBS Returns to Profit as CEO Ermotti Affirms Buyback Plans
Fortune - BP quarterly profits drop 45% to $2.7 billion but share buybacks stay
Reuters - UBS shares soar as smashes profit forecast, sticks to share buybacks
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Top Pieces
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Nikkei Asia - Coffee prices soar as Vietnam farmers switch to durian
Man Institute - Views from the Floor - The Weaponisation of Commodities; and The Yen Conundrum
Apollo Academy - The Forecasting Record of the Fed and the Market
FT - Rishi Sunak’s ‘hung parliament’ claim rests on heroic assumptions
Surplus Energy Economics - #277: At the limits of monetary possibility
FT - Peloton and Carvana: the pandemic stars headed in different directions
Bloomberg - At $2 Million Per Minute, Treasuries Mint Cash Like Never Before - Bloomberg
Fidenza Macro - Weakening US data and a new bull market in the Japanese yen
Bloomberg - Global Bond Rally Faces Supply Test as US Refunding Kicks Off
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some days it's tougher to find things to discuss than others! today is one of those days