The market this morning is focused on US retail sales and not conflict globally. They topped forecasts (receipts +0.7% in Mar, matching the highest estimates), and last mo’s figure was moved up too. This feeds into GDP, which feeds into revenues and earnings for companies, which feeds into pocketbooks and demand, which feeds into inflation. So…traders seem to be cheering on potential strength in fundamentals over rate cuts this morning.
Just look at bond yields after the retail sales figure.
Iran basically said—OK, we attacked you directly, but we won’t do more if you don’t get back at us too badly. Israel said, “Yah, No” (paraphrasing). So everyone on the planet is trying to talk these folks off the ledge so that a world war doesn’t start, or even a larger regional war. For example, Biden told Netanyahu that the US will not participate in any counter strike against Iran, per CNN. An up-market means that investors are more excited about retail sales than a worsening of the conflict, today.
First, the path for crude depends on Israel’s response; analysts are estimating that a lengthy conflict could include px > $150. Citi just raised its 3-month WTI price target. GS says that px reflect a $5-to-$10-a-barrel premium from supply risks. Why should you care? Are you flying? Driving? Getting goods that came over on a boat? Want to buy a house but want rates to come down? It all matters. Second, base metals were all over the place in London post US and UK sanctions that banned deliveries of Russian supplies to the LME and the CME. Why should you care? It’s all about inflation and rates…and eventual demand.
ECB’s Simkus is hinting that they could cut rates 3 times this year with a chance for a 4th, per Bloomberg. Such a tease, such a tease. Especially when his US friends are bringing their expectations down from 3 to maybe 2 if our economy stays so hot.
Tesla will axe > 10% of its global workforce, or about 14,000 jobs. Plus 1 more job for whoever messed up Grimes’ set at Coachella. Musk cited duplication of roles and the need to reduce cost as reasons for the cuts in an email to his staff, but let’s just call a spade a spade. You made too many cars. People aren’t buying them. You slashed prices. Have inventory. China is heating up the race with its own cheap cars. Now, you’re laying folks off.
US regional banks are increasing their lending to oil, gas and coal clients, as their EZ peers are backing off. Maybe their peers know something that they don’t? Anyway, BBG says that lenders including Citizens, BOK Financial and Truist have moved between 13 and 40 steps up the league table for fossil-fuel lenders since the end of 2021.
Apple iPhone shipments are down -10% with Samsung regaining the market share lead, per IDC.
The yen weakened to a 3-decade low against the USD amid speculation Japan’s trade balance will deteriorate on higher oil prices. The BOJ may place less emphasis on inflation in its policy setting, per Reuters.