Syz the moment

Beijing’s stimulus measures appear insufficient to boost domestic consumption, with price wars in the auto sector adding to downward pressure. 🟥 The consumer price index fell 0.1% from a year earlier, according to data from the National Bureau of Statistics released Monday, compared with Reuters’ median estimate of a 0.2% decline. 🟥 CPI slipped into negative territory in February, falling 0.7% from a year ago, and has continued to post year-on-year declines of 0.1% in March, April, and now May. Core inflation, excluding food and energy prices, however, rose 0.6% in May — highest since January this year, according to Wind Information. Separately, deflation in the country’s factory-gate or producer prices deepened, falling 3.3% from a year earlier in May, marking the steepest decline since July 2023 and a sharper drop compared with analysts’ estimates of a 3.2% fall, according to LSEG data. Source: CNBC

👉 Over the past 12 months, roughly half of all fixed income product coming to the market has been Treasuries, see chart below. 👉 This is not healthy. Half of credit issued in the economy should not be going to the government. ➡️ The consequence is that investors need to allocate more and more dollars to finance the government rather than financing growth in the economy through loans to firms and consumers. Source: Peter Mallouk

First-quarter earnings season wraps up, underscoring corporate strength. S&P 500 companies grew profits 12.5% y-o-y, the third quarter of double-digit growth in the past four. While earnings growth estimates for 2025 have been revised down from 14% to 8.5%, the 2026 outlook remains steady, pointing to the potential for reacceleration. Notably, the forward 12-month earnings estimate has recently reached a new high, providing a fundamental anchor for rising equity markets. While valuations have undoubtedly contributed to the recent gains, earnings appear to have also played an important role as well. Source: Edward Jones

Source: Goldman Sachs, Mike Zaccardi, CFA, CMT, MBA

As the chart below shows, electricity used by data centers alone, already as much as that of Germany or France, would by 2030 be comparable to that of India, the world's third-largest electricity user. This would also leapfrog over the projected consumption by electric vehicles, using 1.5 times as much power than EVs by the decade’s end. Data center energy consumption is growing fastest in the United States, home to the world’s largest concentration of centers. Power needed for US server farms is likely to more than triple, exceeding 600 terawatt-hours by 2030, according to a medium-demand scenario projection by McKinsey & Co. The boom in building new warehouses for data stored in the cloud and answering AI queries underscores the urgency for policymakers, who need effective energy strategies to ensure adequate supplies can meet surging demands. Increasing electricity demand from the technology sector will stimulate overall supply, which, if responsive enough, will lead to only a small increase in power prices. More sluggish supply responses, however, will spur much steeper cost increases that hurt consumers and businesses and possibly curb growth of the AI industry itself. Source: IMF

Source: Barchart

Excess inventory is piling up. Relative to buyer demand, we now have the highest inventory in close to a decade. Which is causing home prices to drop in over half the U.S. Source: Nick Gerli @nickgerli1

May. Unemployment Rate: 4.2%, [Est. 4.2%, Prev. 4.2%] May. Average Hourly Earnings (MoM): 0.4%, [Est. 0.3%, Prev. 0.2%] May. Average Hourly Earnings (YoY): 3.9%, [Est. 3.7%, Prev. 3.8%] Source: Bloomberg