As expected, the ECB lefts rates unchanged.
The European Central Bank approach continues to follow a data-dependent approach in determining rate path. THE STATEMENT • Inflation forecasts by ECB staff have been lowered, especially for 2024, largely due to reduced energy price pressures. Inflation is now expected to average 2.3% in 2024 and to stabilize around 2.0% in the following years; core inflation projections also revised downwards. They nevertheless say that domestic price pressures remain high, partly due to wages. They say that domestic price pressures remain high, partly due to wages. • Growth projections for 2024 have been downgraded to 0.6%, with a gradual recovery anticipated, leading to 1.5% growth in 2025 and 1.6% in 2026. • The ECB believes current interest rates, if maintained, will significantly contribute to reducing inflation and has committed to keeping rates at restrictive levels as needed. MARKET REACTION • EUR/USD is weaker on the news (to 1.0875) and EUR rates extend their move lower (they were already down every day this week, and prior to the ECB announcement). German 10y is down -7bp to 2.25% at the time we write • Rate cuts expectations are slightly increased for this year, but not massively so far (still four 25bp rate cuts by the end of the year when rounding the probabilities) OUR TAKE • Overall, this is a rather dovish statement for now - let see if Lagarde press conference will reinforces the dovish reading or if she counterbalances the message from the downward revisions on growth in inflation. Source: chart: Bloomberg
Nvidia, $NVDA, has hit a record $2.2 TRILLION in market cap and is now up 83% in 2024.
Since the October 2023 low, Nvidia has risen 125% and added $1.3 TRILLION in market cap. Nvidia is also now just 18% away from passing Apple, $AAPL, as the 2nd most valuable company in the world. Since October 27th, Nvidia has added an average of $15 billion in market cap PER TRADING DAY. This truly is one of the most historic runs in a stock ever. Source: The Kobeissi Letter
Goldman Sachs has upgraded its buyback forecast for 2024, anticipating a total of $925 billion in buybacks for S&P 500 companies, marking a 13% year-over-year increase.
They also took the opportunity to introduce a prediction for 2025: $1.075 trillion in buybacks, thus surpassing the trillion-dollar mark, setting a new historical record, and representing a 16% year-over-year growth. source : GS
U.S. Households are now spending a record $573.4 billion on non-mortgage interest payments which for the first time in history is roughly the same as mortgage interest payments.
source : Barchart
U.S. companies will have to start telling the public about their climate risks
The SEC voted Wednesday to impose climate-disclosure requirements that will be significantly softer than those it proposed in March 2022 after the agency received thousands of comment letters and numerous litigation threats over the plan. In the biggest change, the regulator won’t force companies to quantify pollution from their supply chains or customers, known as Scope 3 emissions. Additionally, firms will face a higher bar for when they need to reveal more direct carbon footprints in their regulatory filings, which are known as Scope 1 and Scope 2 emissions. source : Bloomberg
Call Options Volume in Precious Metals is surging to 1-year highs according to Goldman Sachs.
Chart includes $GDX $GLD $SLV Source: barchart
Bitcoin inflows to exchange user deposit wallets are low, i.e those who have bictoin in storage do not show any intent to sell even after recent rally
Source chart: CryptoQuant
Japan | Yen Gains With Bank Stocks as Wages, BOJ Remarks Boost Hike Bets – Bloomberg
The yen climbed to a one-month high and Japanese bank shares rose after wage data and a Bank of Japan board member’s remarks bolstered speculation the authority will raise interest rates this month. Japanese government bonds extended their drop as data from an auction of 30-year debt indicated weak investor demand for long-maturity securities ahead of the expected BOJ shift. Policy-sensitive two-year notes also fell, with their yield climbing to 0.195%, the highest level since 2011.
