Today, the US Bureau of Labor Statistics said consumer prices gained 5% in the year through March, which is below what we’ve seen in the past few months, when it reached more than 10%. It was at 6% in February.

However, the core index, which excludes food and energy costs, rose 5.6%, which is higher than the 5.5% recorded in February.

A lot of uncertainty remains over how fast price increases will cool, and investors increasingly worry about recession, and even stagflation, when persistent high inflation mixes with a stagnant economy and high unemployment.

The Nasdaq just recorded five declines in six sessions. Today, it opened again slightly in the red, while the S&P 500 and the Dow Jones were up 0.2% and 0.3%, respectively. This does not call into question the love affair between investors and equities, but it does illustrate the fears surrounding the outcome for inflation.

The US technology index, which is an excellent barometer of investor appetite, is coming off a sharp rebound quarter after a calamitous 2022. Yesterday, the Nasdaq 100 lost 0.7% without ever having moved in the green during the session. The S&P500, on the other hand, rose for a good part of the day, but in the last half hour it fell to zero.

Investors considered today’s data to be crucial, but the reading is complex to decipher. While overall inflation is cooling, core inflation remains stubborn, although it has been cooling overall in the past few months. It doesn’t do much to validate the ideal scenario in which the Fed will stop raising rates, or even start cutting them in the near future, to avoid a recession. If core inflation continues to rebound, the cost of money is likely to be higher for longer, feeding economic pessimism and weighing on companies that need to fuel their growth with new money. In other words, cyclical and growth stocks, precisely those that have been alternating leadership in the markets for the past few weeks, could suffer.

Today, Canada is due to unveil its monetary policy decision, and we will also have to keep an eye on the publication of the minutes of the last Fed meeting, especially as it should contain elements on what central bankers thought of the banking crisis at that time, i.e. three days after the disaster rescue of Credit Suisse by UBS. To complete the picture, I should also mention that the IMF published a report yesterday that does not add much to the debate: there are still risks for the world economy and the turmoil in the banking world does not help. Thanks, but we suspected as much.

 

Economic highlights of the day:

Two important lines for monetary policy today in the US: the first estimate of March inflation and the content of the discussions of the last Fed policy committee. All the agenda is here. Earlier today, Japanese machinery orders contracted less sharply than expected in March (-4.5% vs. -6.4% expected).

The dollar is down 0.6% to EUR 0.9103 and lost 0.3% against the pound to GBP 0.8021. The ounce of gold rebounds to 2017 dollars. Oil accelerates with North Sea Brent at USD 86.44 per barrel and US WTI light crude at USD 82.31. The yield on US 10-year debt moves to 3.43%. Bitcoin is trading around USD 30,000.

 

In corporate news:

General Motors, Ford, Tesla - The U.S. Environmental Protection Agency on Wednesday proposed sweeping cuts in emissions from new cars and trucks through 2032, which could mean that two out of every three new vehicles sold within 10 years will be electric.

JPMorgan, Wells Fargo, Citigroup and Bank of America - The banks that came to the rescue of First Republic Bank in March plan to set aside about $100 million each in the first quarter to protect against potential losses, two sources familiar with the matter said.

National Cinemedia - The film advertising group said Tuesday it had filed for bankruptcy protection and reached a restructuring agreement with its lenders. The stock fell 21.1 percent in premarket trading.

Alibaba, Baidu, JD.Com - New York-listed shares of the Chinese companies are down almost 2% on rising geopolitical tensions between China and Taiwan.

Apple, Alphabet, Tesla and Meta - Major technology stocks fall slightly in pre-market trading as US Treasury yields rise.

Emerson Electric- Industrial conglomerate Emerson Electric announced Wednesday that it would buy test and measurement hardware and software solutions provider NI Corp for $8.2 billion to expand its automation capabilities.

ConocoPhillips - The oil producer on Wednesday raised its target for reducing greenhouse gas emissions by 2030 to 50-60% from 40-50% and said it plans to spend an average of about $10 billion a year over the next decade.

American Airlines said Wednesday it expects first-quarter adjusted earnings of between 1 and 5 cents a share, below analysts' expectations of 6 cents. The stock is down 2% in premarket trading.

Carlyle - Veritas Capital has terminated negotiations with Carlyle Group for the latter's acquisition of a 50 percent stake in healthcare technology company Cotiviti for valuation reasons, a source familiar with the matter said.

Newmont - The U.S. mining group's A$29.4 billion ($19.6 billion) bid for Australia's Newcrest Mining faces hurdles, including getting the green light from shareholders and regulators, as well as the full support of the target company's board, analysts said Wednesday.

HP - A U.S. appeals court on Tuesday overturned a judge's decision to dismiss an earlier lawsuit alleging that HP misled its shareholders by using unprofitable tactics to boost sales of its printing supplies in 2015 and 2016.

Fox Corp - Robert Schwarz, a shareholder in the US media group, sued chairman Rupert Murdoch and four other board members on Tuesday, saying they failed to stop Fox News from broadcasting false information about the 2020 US presidential election, damaging its credibility and leading to legal action.