FOREX: EUR Boosted by Hawkish ECB Presser, JPY Underperforms
Jun-05 18:55
* The Japanese yen has underperformed on Thursday, prompting USDJPY to consolidate back above 143....
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US STOCKS: Late Equities Roundup: Utilities & Energy Sectors Outperform
May-06 18:51
- Stocks continue to trade weaker late Tuesday, but off morning lows, buoyed by Utilities and Energy sectors as crude prices rebound (WTI +1.93 at 59.06). Currently, the DJIA trades down 304.04 points (-0.74%) at 40914.08, S&P E-Minis down 29.75 points (-0.52%) at 5642, Nasdaq down 107.1 points (-0.6%) at 17737.53.
- Constellation Energy surged 12.22% after missing earnings but revenues beat ($6.8B), Vistra +4.56%, Duke Energy +2.64% and AES Corp +2.19%. Leading oil and gas stocks included APA +2.16%, Marathon +1.97%, Exxon Mobil +1.70%, Occidental Petroleum +1.44% and Kinder Morgan +1.04%.
- Conversely, Health Care and Information Technology sectors underperformed, pharmaceuticals weighing on the former: Vertex Pharmaceuticals -11.69% on light first quarter sales, Moderna -11.68%, Regeneron Pharmaceuticals -6.76% and Eli Lilly -5.41%.
- Meanwhile, Information Technology sector shares underperformed: despite better than expected earnings, Palantir Technologies fell 11.69% as analysts raise international growth concerns; elsewhere, Teradyne -1.71% and Intel Corp -1.50%.
- The latest earnings cycle is approximately 76.8% complete (by market cap of the S&P 500). Earnings expected after today's close include: Cytokinetics Inc, Lucid Group, Arista Networks, Advanced Micro Devices, Rivian Automotive, Astera Labs, International Flavors & Fragrances, Electronic Arts, Mosaic, Wynn Resorts, Eos Energy, Devon Energy and Super Micro Computer.
US OUTLOOK/OPINION: Macro Since Last FOMC: Growth - Confidence Slumps [2/2]
May-06 18:44
- This relative resilience in the hard data, which still doesn’t yet reflect the escalation in US trade policy in April, is in firm contrast to soft data.
- The Conference Board reported consumer confidence fell for a fifth consecutive month in April to its lowest since May 2020, although its expectations component was even weaker at its lowest since Oct 2011. After a 12.5pt decline to 54.4, expectations are "well below the threshold of 80 that usually signals a recession ahead" per the Conf. Board press release. This came as "expectations about future income prospects turned clearly negative for the first time in five years".
- These findings are echoed in the University of Michigan consumer survey although it’s flash/final readings suggest the partial backtracking on reciprocal tariffs on Apr 9 after market turmoil following Apr 2 “Liberation Day” announcements prevented an even worse reading.
- Specifically, consumer sentiment fell from 57.0 in March to 52.2 as opposed to 50.8 in the preliminary reading (which had been collected Mar 25-Apr 8), although that’s still the lowest since mid-2022 and below any month for sentiment through 2008-09. Within the survey, unemployment expectations for twelve months out have seen two months with an index close to lows seen in 2008/09 (lows here being higher unemployment, and specifically the pace of increases rather than level of unemployment).
US OUTLOOK/OPINION: Macro Since Last FOMC: Growth - Solid Domestic Demand [1/2]
May-06 18:42
- Real GDP growth was technically negative in Q1 although not as bad as it could have been amidst particularly wide uncertainty in tracking estimates, not least owing to a surge in monetary gold imports that show in merchandise trade data but not national accounts.
- Real GDP fell -0.3% annualized, close to a consensus of -0.2% but one that hadn’t fully adjusted to a surge in consumer goods imports in advance March data just the day beforehand. A median of 26 analyst estimates updated the day prior expected -0.8% whilst the Atlanta Fed’s GDPNow gold-adjusted estimate was -1.5%.
- That clearly marked a sharp slowdown from the 2.45% in Q4 and 3.1% in Q3. However, hiding beneath some significant crosscurrents from net trade and inventories, private domestic demand was surprisingly robust. At 3.0% in Q1, it maintained the 2.95% in Q4 or 3.0% averaged in 2024, thanks to a surge in non-residential investment plus also firmer than expected personal consumption. Of course, there remain significant question marks over the extent to which it’s been boosted by tariff front-running.
- March's Personal Income and Outlays report showed a strong, partly tariff-related, pickup in real consumption in March (0.7% M/M after 0.1% in Feb and -0.4% M/M in Jan) that couldn't offset a weaker quarter as a whole.
- That said, personal income dynamics were fairly robust at quarter-end, suggesting that despite collapsing sentiment, there is still scope for consumer demand to remain underpinned heading into Q2.
- The least we can say is that if there is a recession looming, it did not start in March based on these data.
