Markets are now only expecting 60 bps of Fed rate cuts in 2024, which is the lowest level since Oct, per Reuters. Except for State Street. They’re expecting 150bps cut, including a 50bps front-loaded cut this summer. We’re not in the State Street camp, but if they prove right—expect a mega rally 📈. The only thing that does make sense with their prediction is that the Fed doesn’t want to look partisan, so they may prefer to move before the election…but that size of a move may make them look partisan, even in June.
Yes, Energy and Materials have been rockin’ it lately. But that won’t move markets much. Interestingly, the median S&P Energy sector stock has a larger market cap than the median S&P Technology sector stock—but Tech has a weighting of 29.5% and Energy is at 4.2%, so Energy doesn’t move the dial for the overall market. But it sure will increase inflation.
TSMC isn’t the only one encouraged to play ball in the US, per Reuters. Sources say next week the gov will award Samsung >$6bn to expand its chip production in TX for 4 facilities in Taylor, including one $17bn factory they announced in 2021, an advanced packaging facility, and an R&D center. Two conclusions: Xi is more mad today, seeing Taiwan and Korea getting all the spoils, and TX residents should expect to start paying Bay Area prices soon for housing, restaurants, etc.
Investors are expecting a luxury sales slowdown given lower China demand and tough y/y comparisons, per Reuters. The first mega shop is LVMH, which reports on April 16th. Then you get Kering, Prada, Hermes…followed by Burberry and Richemont.
The airlines don’t have enough planes, yet people want to fly this summer at higher-than-pre-pandemic levels, so expect lines and mad customers. Especially if your door falls off and you paid top dollar for your seat, per Reuters. They are spending money, but it’s on repairing older, less fuel-efficient jets, costing them a ton to secure.
Blackstone is working to take skincare company L’Occitane private, per BBG.
The ECB bank survey shows that loan demand declined meaningfully, per BBG. Folks don’t want to borrow at high rates, especially if they may be coming down soon—and when times have been tough economically.
Anyone near a teen applying to college has probably heard of the financial aid submission debacle. Basically, they spent years plus hundreds of millions of dollars to try to reduce the size of a financial aid form and botched it. So, lots of people can’t figure out what to do, because they don’t know if they can afford college. Others didn’t even fill out the confusing form (FAFSA). If you haven’t focused on this yet, you’ll be hearing about it—and the impacts of the problem which negatively affect lower-income students as well as cash-strapped institutions.
