Market 05/06: Improvement in capital markets and manufacturing in China

Fed Goolsbee: Fed should improve the way it communicates policy messages

Fed Goolsbee said:

• Policymakers should improve how they communicate their views on economic conditions

• Fed should link interest rate forecasts to economic forecasts

China: Manufacturing activity remains positive - boosting capital market activity

Caixin/S&P Global Services PMI in April only slightly down to 52.5 (from 52.7 in March), maintaining expansion for the 16th consecutive month.

• Composite PMI also edged up to 52.8 in April (from 52.7 in March).

Major Mainland stock exchanges rally after holiday on slightly recovered market confidence in economic outlook

During the 5-day Labor Day holiday:

• 295 million Chinese traveled, +7.6% Y/Y

• 166.89 billion RMB spent, +12.7% Y/Y

→ Read more at: China: Capital market recovery correlated with economic outlook?

China continues to expand influence in emerging markets: signs agreement with Congo on copper and cobalt trade.

• Congo to receive 324 million USD/year for infrastructure projects from Chinese partners until 2040 if copper price stays above 8,000 USD/ton.

French and Chinese companies sign deals on sidelines of Xi Jinping's Paris visit

US: Consumer and housing market updates under high interest rate pressure

Consumer

• Even as CPI Y/Y falls, Americans still see high cost of living/inflation as the top issue facing their families

• Fewer jobs, lower retail sales

Housing market

• US rental vacancy rate rises to 6.7% in April, near 4-year high

• Renters see only a 40.1% chance of them owning a home, down from 44.4% last year and a record low (since 2015)

• Households expect rents to rise 9.7% in next 12 months, vs 8.2% in Feb 2023

Eurozone: Business activity grows at fastest pace in nearly 1 year

HCOB Composite PMI for April rises to 51.7 from 50.3 in March, higher than the 51.4 estimate.

Eurozone March Producer Prices -7.8% Y/Y, down more sharply than expected -7.7%

Crypto Market: SEC warns Robinhood Crypto of potential securities law violations

German bank Kreditanstalt fuer Wiederaufbau prepares to issue first blockchain-based digital bond

SEC warns Robinhood Crypto of potential securities law violations

Q1 FY24 Earnings: Berkshire Hathaway

• Net profit: 12.7 billion USD

• Repurchased 2.6 billion USD in shares

• Reduced Apple stock holdings by ~13%

• Profit margin 14% (+3pp Y/Y)

• Cash and short-term securities 189 billion USD

Berkshire Hathaway's cash reaches all-time high, 189 billion USD in Q1/2024, +19 billion vs Q4/2023 and +70% vs 2022

Key events for the week 05/06 - 05/12

1. EIA Short-Term Energy Outlook - Tuesday

2. 10-year Treasury auction - Wednesday

3. Initial Jobless Claims - Thursday

4. Consumer Sentiment data - Friday

5. 8 Fed officials speeches this week

• ~20% of S&P 500 companies report earnings

Other news

1. Biden administration finalizes rule allowing undocumented immigrants who arrived as children to enroll in ‘Obamacare’

2. Tesla lays off more employees from software, service, and engineering departments

3. Microsoft trains new AI model, ready to compete with Google, OpenAI

4. Biden administration approves $60 million military aid package to help Haiti suppress violent gangs ravaging the country.