The US PPI rose by 0.5% between March and April, due to strong gains in the costs of services and goods, while a 0.3% gain was expected. However, the PPI fell by a downwardly revised 0.1% in March. On a yearly basis the US producer price index advanced by 2.2%, in line with expectations. This is the largest increase since rising 2.3 percent for the 12 months ended April 2023, the US Bureau of Labor Statistics said - but this reading follows the 1.8% increase recorded in March (revised from 2.1%). The Core PPI, which excludes foods, energy, gained 2.4% on a yearly basis, in line with estimates. On a monthly basis, it gained 0.5%.

Futures on the main Wall Street indices didn’t react much after the release, staying close to zero, since the data remains pretty mixed. Investors are eagerly awaiting the speech for Fed chairman Jerome Powell, scheduled later this morning, to get more clues about monetary policy this year. They will also assess tomorrow’s US consumer price index for April to refine their rate cuts forecasts.

May is often a sluggish month on the stock market, as investors emerge from the annual results/Q1 results combo and spend more time planning barbecues and weekends than investment strategies. Hence the famous expression "Sell in May and go away". By the way, if I am to believe the research of Edward Yardeni, who comes across as a pretty serious guy, May is the second most depressing month of the century for the S&P500 when the 97-year rise and fall is averaged out: -0.11%. February did even worse with -0.09%.

Yesterday, indices hovered around equilibrium. The S&P500 ended flat, flanked by a Dow Jones at -0.2% and a Nasdaq 100 at +0.2%. In Europe, the Stoxx Europe 600, on the other hand, managed to continue its upward trend, rising for the 7th time in a row, gaining 0.02% thanks to the healthcare sector, boosted by Novo Nordisk's 3% rise, assisted by its Swiss peers, Novartis and Roche, up by around 1%.

Faced with these anemic variations, a roaring kitten woke up the meme stocks. "Roaring Kitty" is the influencer who provoked decerebrate reactions on several stocks, when people were bored in confinement during the coronavirus pandemic. In particular, he pushed the stock of video game store GameStop, with nostalgic rhetoric. The stock became totally disconnected from its fundamentals, with incredible volatility. That said, some people got very rich, others lost, and a short-selling fund even had to close down, if I remember correctly. Other stocks received the same kind of treatment, including AMC Entertainment and Tupperware.

On Sunday, Keith Gill, aka Roaring Kitty, made his return to the X network. First by making it clear with a drawing that he was back in business after a three-year absence, then by posting a superhero video montage and hinting that he'll be launching a cryptocurrency. All that's missing is a hint of AI to make the hype complete. Well, it worked beyond anything imaginable, let alone reasonable. GameStop gained 74% at the close (we're talking about a company that weighed $5 billion before), Tupperware 36%, AMC 78% and Hertz 12%. None of the four cases were mentioned by the kitten, but retail investors frantically bought what had worked three years earlier. So, here we are. I imagine a few short-selling funds reviewed their positions, just in case Roaring Kitty threw his pack of aficionados onto another file. The combo to avoid for a bear fund during this phantasmagorical episode: a company with a long-standing, strong brand in serious financial difficulty.

In the Asia-Pacific region, performance was mixed this morning, and little changed from the previous day's levels. Variations are below 0.2% in Japan, India, South Korea and Hong Kong, and barely higher in Australia and mainland China. European indices are hesitant.

Economic highlights:

Today's main events are the release of the ZEW survey of German financial sentiment and US producer prices in April, as well as the Fed Chairman's speech. The full agenda is here. 

The dollar is worth EUR 0.9269 and GBP 0.7966. The ounce of gold is trading at USD 2,345. Oil is slightly down, with North Sea Brent at USD 82.97 a barrel and US light crude WTI at USD 78.35. The yield on 10-year US debt reaches 4.49%. Bitcoin is trading at USD 61,000.

In corporate news:

  • Apple - The Apple Group's main supplier, Foxconn, reported a 72% rise in first-quarter earnings, boosted by strong demand for computer servers dedicated to artificial intelligence (AI).
  • Uber announced on Tuesday a $1.25 billion deal to take over Delivery Hero's Foodpanda business in Taiwan and buy new shares in the German group.
  • U.S. President Joe Biden unveiled new measures on Tuesday to raise tariffs on numerous Chinese imports, including electric vehicles, semiconductors and medical products. Chinese electric vehicle manufacturers Li auto and Xpeng each lost more than 2% in pre-market trading.
  • Rumble announced on Monday evening that it was taking legal action against Alphabet subsidiary Google, accusing the technology giant of anti-competitive practices via its digital advertising products. The video-sharing platform is seeking damages of over one billion dollars.
  • Hesai - The Chinese manufacturer of lidars (laser remote sensing) used in autonomous vehicles announced on Monday that it was suing the US administration, contesting its inclusion on the list of companies working with the Chinese army.
  • Walmart will cut hundreds of jobs and ask most telecommuting employees to return to the office, the Wall Street Journal reported Monday, citing sources close to the matter.
  • Buzzfeed is down 1% in pre-market trading after the company reported an 18% drop in first-quarter sales.
  • Alibaba advances 0.7% before the publication of its quarterly results.
  • GameStop continues its rally, gaining 39.2% in pre-market trading on Tuesday after a 74% jump on Monday linked to the reappearance on social networks of an iconic character, Roaring Kitty, after a three-year absence.
  • Marathon petroleum - On Monday, America's leading oil refiner promoted its president Maryann Mannen to CEO, effective August 1, replacing Michael Hennigan.

Analyst recommendations:

  • Expeditors International Of Washington Inc.: BNP Paribas Exane upgrades to neutral from underperform with a price target raised from USD 97 to USD 112.
  • Roblox Corporation: ROTH MKM downgrades to neutral from buy with a price target reduced from USD 55 to USD 35.
  • Expedia Group, Inc.: Melius Research LLC maintains its hold recommendation with a price target reduced from USD 157 to USD 125.
  • Mettler-Toledo International, Inc.: Zacks maintains a neutral recommendation with a price target raised from USD 1313 to USD 1586.
  • Nike, Inc.: CICC maintains its outperform recommendation and reduces the target price from USD 137.46 to USD 109.78.
  • Starbucks Corporation: Wolfe Research maintains its outperform recommendation and reduces the target price from USD 109 to USD 85.
  • Walmart Inc.: Baird maintains its outperform recommendation and reduces the target price from USD 195 to USD 65.
  • Deckers Outdoor Corporation: CICC initiates an outperform recommendation with a target price of USD 1002.17.
  • Crh Plc: RBC Capital initiates an Outperform recommendation with a target price of USD 110.
  • Moderna, Inc.: Evercore ISI initiates an in-line recommendation with a target price of USD 120.
  • Babcock International Group Plc: Citigroup maintains its buy recommendation with a price target raised from GBP 5.30 to GBP 6.40.
  • Tesco Plc: Bryan Garnier & Co. initiates a buy recommendation with a target price of GBX 349.