After yesterday’s good US CPI data, investors were expecting the US PPI, published at 8.30am. And it was pretty good, since producer prices were up 0.2% in April, which is lower than the 0.3% expected in the consensus.

The Labor Department said that year-on-year, the PPI increased 2.3%, after a 2.7% gain in March. Excluding food, energy and trade services, core producer prices gained 0.2%, which is slightly higher than the 0.1% rise in the prior month, but still within expectations Over the past year, core PPI was up 3.4% down from 3.7% in March.

This shows that inflation is cooling at producer levels, as well as with consumers, even though prices are still rising quite a bit. This strengthens the case that the Federal Reserve will pause rate hikes interest rates further at the next meeting in mid-June.

But Wall Street indexes didn’t rise after the release of the data. This is because JPMorgan’s Jamie Dimon told Bloomberg that markets will be gripped by panic as the U.S. approaches a possible default on its sovereign debt. This was enough to send global shares down. Dimon is clearly gaining lots of influence these days – one little interview is enough to move the financial world... Indices were also hampered by Walt Disney’s poor results and the return of speculation on the future of Californian bank PacWest.

Fears of recession are also lingering. You know, the recession that everyone is talking about but which is still two months away. The inflation/central bank duo also continues to dominate financial debates almost everywhere. The Wall Street Journal yesterday opened an interesting debate on this subject, pointing out that Americans could start to get used to high inflation, which is a problem in itself since it is a self-feeding vector for price increases.

Today, we also had the Bank of England rate decision. It increased rates by a quarter point to 4.5%. The UK is still suffering from record price rises, with year-on-year inflation at 10% in March, well ahead of other major economies. A problem that China is not facing as Beijing announced overnight that its inflation was just 0.1% in April, while its producer prices fell by 3.6%. I suppose there are two interpretations of this data. One can be happy that the country is escaping the evils of the world. Or one can find these statistics a bit strange and certainly inconsistent with the great awakening of the Chinese economy. But I can already read comments that these figures are poor enough to eventually force the Chinese central bank to spur the economy with new incentives. It always comes back to the same thing: behind every economic problem, there is a solution: a central bank.

 

Economic highlights of the day:

The Bank of England decision, weekly data on employment and producer prices in the United States in April are today’s main indicators. All the agenda is here. In China, consumer prices rose by only 0.1% in April, less than expected, while producer prices contracted more than expected (-3.6%).

The dollar is up 0.7% against the euro to EUR 0.9172 and up 0.9% against the pound to GBP 0.7995. The gold ounce is down to USD 2013. Oil is firm, with North Sea Brent at USD 75.25 per barrel and US WTI light crude at USD 71.45. The yield on US 10-year debt fell to 3.44%. Bitcoin is trading below USD 27,500.

 

In corporate news:

  • Walt Disney was down 5% in premarket trading after losing subscribers to its Disney+ streaming platform over the January-March period.
  • Alphabet was up 1% in premarket trading, building on gains from the previous day after Google unveiled artificial intelligence products to compete with Microsoft.
  • Tapestry jumped 8% in premarket trading after it raised its full-year profit and revenue forecasts, betting on higher prices and demand for its luxury handbags.
  • Beyond Meat said it expects stronger revenue growth in the second half of the year after posting a narrower-than-expected quarterly loss, as supply chain pressures ease and expenses are controlled.
  • JD.com reported first-quarter revenue above market expectations thanks to demand. Its shares were up 4.6% in pre-market trading.
  • Robinhood Markets - The online brokerage reported better-than-expected quarterly revenue, buoyed by the Federal Reserve's rate hikes.
  • Nordstrom has appointed Cathy Smith as CFO, a position she held previously at Target.

 

Analyst recommendations:

  • Alcoa - Credit Suisse upgraded its recommendation to "Outperform" from "Neutral".
  • Albemarle: KeyBanc Capital Markets upgrades to overweight from sector weight. PT up 39% to $270.
  • CF Industries: Piper Sandler downgrades to neutral from overweight. PT up 18% to $80.
  • Diploma: Jefferies upgrades from hold to buy targeting GBp 3150.
  • Mosaic: Piper Sandler downgrades to neutral from overweight. PT up 14%  to $42.
  • Roblox - Roth MKM raised its recommendation to "buy" from "neutral".
  • Pfizer: Daiwa Securities downgrades to neutral from outperform. PT down 0.8% to $38.
  • TransDigm: Wells Fargo Securities raises PT to $840 from $725. Maintains equal-weight rating.
  • Twilio: Goldman Sachs downgrades to neutral from buy. PT up 8.3% to $53.
  • Waters Corporation: Deutsche Bank lowers PT to $295 From $355, Maintains Hold rating.
  • Wolverine World: Williams Trading LLC raises PT to $23 from $19. Maintains buy rating.