Investors are waiting for the Fed’s updated forecasts, which will signal whether there could be another 25bps hike this year—and what the potential easing ramp could be in 2024.
Biden made fast friends with Saudi Arabia to solidify a ship-to-rail economic corridor to link India with the Middle East and Europe, in competition with the Belt and Road Initiative by China. A decade later, the US is realizing it needs to have a plan.
The UAW’s Fain rejected an offer by Stellantis $STLA for a 21% raise. It sounds like this is going to last a while. Although GS downgraded Tesla $TSLA because of price cuts, you can imagine what will happen with demand/quantity. I recently looked at all the new EVs out in the market, and the prices from many of the offerings just can’t compete. You can imagine what will happen to US competitiveness with labor costs hiked 40% at $GM, $F and $STLA. At the same time, real wages for workers have tanked through the years (see below). So, both sides need to figure out a thoughtful solution.
Britain’s rental costs grew at the fastest pace in at least a decade. Home prices are up as well. Crickets from the Brexit believers.
BBG is out with a story we’ve talked about for a while now. Analysts expect profits to increase. At the same time, most folks think the economy will slow (which is the driver behind the Fed being able to pause and then maybe pivot to lower rates). Both can’t be true. So, pick your expected reality. We believe that profits will be pressured. Consumers won’t allow for record profits forever.
OK, China, want to sorta-ban our iphones? Well, we’ll sorta work with Foxconn in India a bit more. Foxconn is doubling its workforce in India, so that Apple has other options.
It moved closer to $95 for the first time since November due to growing supply tightness and eroding inventories. Know what happens to inflation when the price of energy goes up? Yep, it goes up too. Know what central bankers don’t do when inflation goes up? Lower interest rates.
Currency traders used to borrow Japanese yen (it was cheap because of sub-zero rates in Japan) and then put the cash wherever yields were higher, taking a slice of the delta. Now, traders are using the yuan to fund carry trades because it fell so much. We’d be careful because Xi can’t like that. Also, since Japan may raise rates in the future, traders will have to look elsewhere.
