Market 03/15: Japan on the path to abandoning negative interest rates

Japan: Rengo may succeed in negotiating a record wage increase of +5.3% y/y

Japan Labor Union Federation (Rengo) provides first estimate of Shunto meeting results with wage increase +5.3% Y/Y — the highest increase in 33 years

Previously, G20 only expected an increase >4%, while last year's increase was only 3.6 - 3.8% but sufficient to keep Japan's inflation above 2% (green line).

BOJ will meet next Monday - meeting results to be announced on Tuesday:

BOJ is expected to announce end of the deflation period + abandoning the negative short-term interest rate policy.

→ Việt Hustler's view: BOJ should act gradually first to avoid a shock to the capital market:

BOJ could start by completely abandoning YCC this month, then raise interest rates next month.

US macro indicators: Industrial production stagnant, import-export prices rising, consumer sentiment little changed

Industrial production index stagnant: revised down for 10 consecutive months

February industrial production modestly higher +0.1% M/M, but annual increase continues to decline -0.23% Y/Y

January Industrial Production index revised from -0.1% to -0.5% — the 10th downward revision in the past 11 months

Capacity utilization unchanged at 78.25% in February

Production index for industry group (Industry group) up +0.8% MoM,
- but due to January being revised down sharply: from -0.5% M/M to -1.1% M/M.

Empire State production index:

Economic conditions index: -20.9
Prices paid down, prices received up

Both import and export price indices rise: adding to inflation pressure

Import prices up +0.3% M/M in February, (January: up 0.8% M/M)
Export prices up +0.8% M/M, slightly down from +0.9% in January

Import prices (excluding fuel) up => increasing inflation pressure in the US

UMich survey: Consumer sentiment little changed

UMich survey shows inflation expectations have normalized…

… but consumer confidence shows slight weakening

China: economic situation continues to stagnate, PBOC strives to avoid Liquidity Trap

China's new home prices in February continued to decline -0.3% M/M — the 8th consecutive month of decline, despite support measures

The continued decline in house prices will greatly affect consumer sentiment among Chinese people
- Retail sales forecast to continue declining:

Total value of IPO deals in China down -39% from 2022.

Loan demand in China grew at the slowest pace in history last month

Amid the increasingly stagnant situation above, the People's Bank of China kept policy interest rates unchanged as expected, with no intention to cut rates:

→ Việt Hustler's comment:

PBoC does not want to cut interest rates simply because they do not want to push themselves into a Liquidity Trap situation.
Related articles: Three important events …. (middle part of the article).
Currently, PBoC is prioritizing fiscal policy (providing rescue packages) and direct market intervention (buying stocks) instead of impacting through interest rate policy.

Q1 FY24 earnings update: Adobe

Share buyback: 25 billion USD
Fee for canceling Figma acquisition: 1 billion USD
Remaining performance obligations: +16% to 17.6 billion USD
Annual Recurring Revenue (ARR) Creative segment: +13% to 12.8 billion USD
ARR Cloud Data segment: +25% to 3 billion USD
Revenue: +11% to 5.2 billion USD (beat estimates by 30 million USD)
Non-GAAP EPS: 4.48 USD (beat estimates by 0.1 USD)
Q2 revenue guidance: ~5.3 billion USD (market expects 5.31 billion)

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