Morning Brew April 17 2023

Good Morning,

Solid Bank earnings on Friday (See Peter`s comment below) caused the expectation for a May hike by the Fed to solidify. The Probability rose to now 80% and the market prices in only 30 basis points in cuts in December.

Jerome Powell had stated in his last FOMC Press conference that tighter credit control by commercial banks had the same effect as rate hikes. 2 Year Yields rose to 4.1% and the yield curve remains massively inverted. Fed speakers towards the end of the week will be closely watched.

The USD Index rose from 100.80 to now 101.60, EURUSD is trading back below the 1.10 at 1.0990 , GBPUSD fell to 1.2415 and USDJPY rose to 133.90 USDCHF 89.30.

Gold and Silver sold off on Friday but seem to be more stable now at 2012 and 25.45. Bitcoin gave up some ground to now trade at 30.000.

In Equities, we continue to trade friendly, the US500 rose to 4143 and seems on track for the major 4200 level, the GER40 trades above 15800 with the 16000 in scope if the sentiment holds.

The G7 set aggressive collective targets for solar power and e wind energy, to quicker phase-out of fossil fuels. Check if your portfolio is set up to gain from the green transition – if you agree with it or not.

The three major US banks JPMorgan Chase, Wells Fargo, and Citigroup have reported Q1 earnings all showing strong growth in net interest income and higher than estimated earnings. From a relative perspective it is clear from the deposit figures and provisions from credit losses that JPMorgan Chase was the big winner and the market reaction today is reflecting this. While the three banks are all mentioning that they have not tightened their credit conditions, Well Fargo says that consumer spending has softened in late Q1.

The week ahead we are fully in the earning season and expectations are rather low, this means there could be a positive surprise , the week is also loaded with economic data and central bank speakers.

Focus may well shift between inflation / Banking Crisis (and the fallout) and earnings so we are like to have a great week for trading. Investors should review their portfolio for the green transformation.

This week’s key earnings releases:

Monday 17 April
Charles Schwab, M&T, Eve Energy, Exor

Tuesday 18 April
Bank of America, Goldman Sachs, Netflix, Johnson & Johnson, United Airlines, Lockheed Martin, Intuitive Surigical, Ericsson

Wednesday 19 April
Tesla, Morgan Stanley, US Bancorp, Zions,Citizens Financial, IBM, Alcoa, Abbott Lab, Lam Research, Las Vegas Sands, Metro, ASML, Heineken

Thursday 20 April
Blackstone, American Express, Comerica, Fifth Third, Huntington, KeyCorp, Sunovus, AT&T, Union Pacific, CSX, Philip Morris, DR Horton, CATL, Tryg, Nokia, Sartorius

Friday 21 April
Procter & Gamble, Regions Financial, Schlumberger, Freeport-McMoRan, Jinko Solar, SAP, Sandvik, Investor

This week’s economic key events

Monday 17 April

• US Empire State survey (Apr)
• US NAHB housing market index (Apr)
• ECB’s Lagarde speaks
• BOE’s Cunliffe speaks

Tuesday 18 April

• US Housing starts & building permits (Mar)
• US Manheim used vehicle prices (Apr)
• Germany ZEW survey (Apr)
• UK Earnings & employment (Feb)
• UK Payrolls (Mar)
• China Retail sales (Mar)
• China Industrial production (Mar)
• China Fixed Asset Investment (Jan-Mar)
• China GDP (Q1)
• Japan Industrial production (Feb, final)

Wednesday 19 April

• US Beige Book
• Eurozone CPI (Mar, final)
• UK CPI (Mar)
• UK PPI (Mar)
• ECB’s Schnabel speaks

Thursday 20 April

• US Philly Fed survey (Apr)
• US Existing home sales (Mar)
• US Initial jobless claims (Apr 15)
• Germany PPI (Mar)
• France Business confidence (Apr)
• Eurozone Consumer confidence (Apr)
• Japan Trade balance (Mar)
• Fed’s Waller and Bowman speak
• ECB’s Visco speaks

Friday 21 April

• US S&P manufacturing PMI (Apr, preliminary)
• US S&P services PMI (Apr, preliminary)
• Eurozone PMI composite (Apr)
• UK Retail sales (Mar)