Israel is readying for a potential attack from Iran, directly or indirectly, within days. The missile and drone attack would be the military answer to Israel’s diplomatic compound attack in Syria last week. The US is preparing defenses. Leaving the politics aside, the market impacts would include higher energy and material prices, a stronger USD, a stronger yen, and capital flowing to defense companies. Gold rallied above $2,400 and Brent topped $90 this morn.
Dimon freaked people out when saying that if rates go up, all assets are worth 20% less. But he qualified his statement by delineating the reasons why rates would go up—a strong economy? Well, that’s stronger labor, and not as bad. Stagflation? More real estate vacancies, and that is bad. He also stated that consumers and businesses are fine. JPM and Wells missed estimates for net interest income. Citi’s profit was above expectations, on the back of companies tapping financing markets, and consumers increasing credit.
Jealous of dough-dealers side-stepping CA’s new labor price hike, Mickey D’s is introducing bagel sandwiches…in CA…because the new pay bump is expected to cost each location $250k without any changes.
BofA’s Harnett warns that (i) a rare rally in tech and commodities, with (ii) higher bond yields and (iii) stronger growth and (iv) high rates shows signs of bubble-forming. This no-landing scenario could move to a hard-landing scenario, he warns.
Bring out the stereotypes. Our Bernanke is telling the Bank of England what to do. He’s recommending they publish an outlook for UK interest rates, alongside 12 other recommendations he gave in an 86 page review on how they do their outlook. You didn’t have to be there to feel the eye-rolling.
Ruffer, the $27+bn UK asset manager, is betting on a meltdown. Two-thirds of their money is in cash, with the interest paying for insurance policies like credit default swaps and stock options in the US that will make them rich if markets crash. They’re betting on a 3-mo window, if you are interested.
Although I prefer strawberry rhubarb, today we’re talking AAPL. The stock chart makes it look like a 1-year deal. But the future depends on China and new stuff, especially in AI. Are they too late to the game? What’s their full strategy? Announcements are getting some credit for the company, but then folks think of the EV debacle. Only Tesla of the Mag 7 has performed more poorly this year. AAPL’s entire Mac line is getting an overhaul with a new line of M4 chips focused on AI, but when did they start working on that?
To get ahead of the wrath, several mutual fund managers in China are proposing a $415k pay ceiling due to Xi’s common prosperity initiative. Imagine GS, MS, etc. telling their partners that their pay was capped to make them more like the ave American.
China’s exports fell -7.5% y/y in Mar in USD terms. The surprise drop in imports is worse for the domestic economy. No global growth driver there.
>80% of the S&P enter their share repurchase blackout periods this week. So, that market driver will be on pause for a bit.