Read on the Trading Floor - 23 April 2024
Today’s focus… Buy the dip?
Macro Themes At Play
Theme 1 - Flash PMI's continue to improve
Theme 2 - Buy the dip?
Theme 3 - BoE in play? Sunak hopes so...
Further reading and listening of note
Theme 1 - Flash PMI's continue to improve
Positive prints globally as CB's run their economies hot and signal the possibility of pending easing. Consumers/corporates are enjoying the accelerating momentum of higher wages / earnings and as a result, there is simply a lot of money sloshing around the system. The UK saw the fastest expansion of output since May 2023, but cost pressures have intensified in the economy whilst a German rebound headlined a positive European data set. The trend is refreshing but soft data has been a red-herring for investors in the post covid world. With companies and households weathering the storm of high real rates, the sole focus of the market is on inflation returning to target and allowing CB's to cut as soon as they've promised. As a result, there has been limited reaction in the fixed income space to the better data set (US10s @ 4.59%, UK10s 4.24%, France 3%, Germany 2.5%).
Bloomberg - German Rebound Drives Euro-Zone Private Sector to 11-Month High
ABN Amro - Eurozone PMIs show economy moving above neutral mark at start of Q2
Morningstar - Strong Services Drive Eurozone Expansion
S&P Global - S&P Global Flash UK PMI
Bloomberg - UK Recovery From Recession Gains Pace as PMI Beats Forecast
Theme 2 - Buy the dip?
Harkster (your research inbox) is full of equity pieces as earnings are front and centre of investors decision tree for the week with approx. 40% of the S&P market value set to report. With tensions in the middle east thawing, oil returning into range and yields softening, some strategists are supporting the notion that this is a correction to be bought. However others like JPM's Kolanovic see a deeper slide. Tonight we get Tesla's widely anticipated earnings kickstarting the crucial Tech prints.
The Lead Lag Report - Utilities Continue To Warn
NY Times - G.M. Reports Big Jump in Profit on Gasoline Car Sales
Bloomberg - Citi Strategists Say Buy the Dip in Stocks on Solid Earnings
Bloomberg - JPMorgan’s Kolanovic Says ‘Correction’ in US Stocks Isn’t Over
RiskReversal Advisors - Big Tech Q1 Earnings Preview with Gene Munster | Okay, Computer. Tech Investing Podcast
Contrarian Investor - Positive Results Ahead of Tesla
Saxo Bank - Equities: Will this be the end of the magnificent seven?
Morningstar - Will Earnings from These 10 AI Stocks Live Up to the Hype?
Steno Research - TRADE ALERT: BUYING THE DIP
Bloomberg - Apple’s China iPhone Sales Dive 19% in Worst Quarter Since 2020
Theme 3 - BoE in play? Sunak hopes so...
Following Ramsden's comments earlier in the week that CPI could in fact gap lower, the proud pound has fought back today against the USD and EUR as PMI beat and Pill pushed back on the expectations of an "early" cut. This is not the Fed, BoE members continuously vote in opposing fashion.
Sunak maybe hoping for a Q3 cut ahead of an Autumn election, however he may not make it through the summer if the May 2nd local elections are as bad as expected. If the Conservatives don't revolt over the summer, will Sunak run a deportation flight as part of his re-election campaign?
Hunt/Sunak are clearly looking to cut national insurance again before going to the polls, they will also hope the BoE can cut and cheer from their campaign lecterns that they miraculously dropped inflation to 2% from Downing Street... Is this a strategy labour would be naïve to dismiss, or is he simply fighting to maintain some sort of a credible Conservative party, only to resign once election counting has ended and head to a VC in California?
FT - How Rishi Sunak’s Rwanda gamble fits into his election bid
Bloomberg - UK Boosts Borrowing to Cover Deficit, Curbing Tax Cut Hopes
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Top Pieces
Discovered on Harkster.com
The Capital Spectator - US Q1 GDP Growth Looks Set For Slowdown In Thursday’s Release
Man Institute - Views from the Floor: Demand is Not the Whole Picture for the Oil Price
Steno Research - Inflation in develoed markets but not in emerging markets?
Ashmore - Monetary policy divergence amid geopolitical volatility
FT - The wrong trousers? Retail has a new solution to the returns problem
Apollo Academy - The US Fiscal Response to Covid was Four Times Bigger than the Marshall Plan
Steno Research - Despite New Aid, Ukraine will lose within 12 months. Plan Accordingly!
Rabobank - BoJ preview
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