US EARLY MORNING: Equity futures and Treasury yields are directionless, trading in a tentative fashion ahead of today's CPI data and FOMC minutes

OVERNIGHT: On Wall Street, stocks were choppy and within tight ranges on Tuesday, with a tentative tone ahead of Wednesday's CPI and FOMC minutes (full US market wrap is here). APAC stocks were mixed after the Wall Street lead (our APAC wrap can be found in the European opening news note here); Sino-US tensions continue to manifest: in late APAC trade, it was reported that China's Commerce Ministry started an investigation into Taiwan's restrictive trade measures on the mainland, and would be looking into measures on the imports of Chinese farm products, minerals, chemicals and textiles. Additionally, it was reported that China plans to impose a no-fly zone north of Taiwan between April 16-18th, action which follows recent military drills by China around Taiwan in response to meetings between high-level US and Taiwan officials (our European opening note can be accessed here).

US PRE-MARKETS: US equity futures and Treasury yields are directionless ahead of today's key US CPI data, as well as the FOMC meeting minutes, which will both help shape expectations for the May 3rd Fed meeting, where the base case is for the central bank to lift rates by 25bps. Accordingly, desks are expecting today's events will engineer some decent price movement, after this week's lacklustre trading conditions ahead of the aforementioned risk events. Goldman Sachs has told its clients that the S&P 500 could fall by at least 2% if the annual rate of inflation rises from the 6.0% prior, and on the other side, the bank's analysts are expecting a stock rally if the reading comes in beneath the consensus 5.2%. Goldman's strategists explained that the "stock market wants a softer print as a hot reading will add more confusion/uncertainty into the equation of what the Fed does from here." Bloomberg adds the context that recent CPI reports have been generating an average +/- 1.9% for the S&P 500 on the day of the CPI release. We have further thoughts on the data within the Day Ahead section, below.

DAY AHEAD:

• Our full interactive calendar can be accessed here; a pdf version can be accessed here.


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  EUROPEAN DATA/SPEAKERS: It is a quiet day for European data and events, with only ECB's Vice President de Guindos due to speak (no text release). From the UK, BoE Governor Bailey will speak at the IMF on "the shifting risk landscape". On the supply front, the UK will sell GBP 900mln of 2039 linkers, while Germany will sell EUR 1bln of 2048 and EUR 1.5bln of 2052 debt.


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  NORTH AMERICAN DATA/SPEAKERS: The main event is the CPI data for March (brief preview below), where the rate of annual headline inflation is expected to cool, although the consensus expects the annual rate of core inflation to pick up a touch. Weekly MBA mortgage applications data is due before the open. In central banks, The FOMC meeting minutes will be released in the afternoon (preview below). Elsewhere, the BoC is expected to keep rates unchanged; the central bank will also publish updated projections (preview below). On the supply front, the US will sell USD 32bln 10yr Note Auction.


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  ENERGY: Ahead of today's EIA weekly energy inventory report, the API's weekly gauge of energy stocks reportedly showed headline crude stocks built by 0.4mln bbls in the week (exp. -0.6mln), with stocks at cushing drawing down by 1.4mln; gasoline inventories built by +0.5mln (exp. -1.6mln), while stocks of distillates drew down by 2mln (exp. -0.8mln).


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  PREVIEW - US CPI (13:30BST/08:30EDT): The consensus looks for headline consumer prices to rise 0.2% M/M, and for the annual rate to cool to 5.2% from 6.0% in February. The core measure of CPI is seen rising 0.4% M/M, although the annual rate is expected to tick up by one-tenth of a percentage point to 5.6%. Within the release, traders will be eying the components from the services sector, which officials still see as a source of discomfort. Fed policymakers have recently looked through the woes in the banking sector, and have emphasised their commitments to bringing inflation under control, with many noting that there is still more work to be done given that inflation is still running significantly above target, despite the progress made thus far. Additionally, some have highlighted that recent moves by OPEC to tighten crude oil markets adds to the uncertainties in bringing down price pressures in the months ahead. While the data will help us shape expectations about what the Fed will do at the May 3rd FOMC meeting, analysts note that there are still further data points that will influence the central bank’s thinking before then. Goldman Sachs has told its clients that the S&P 500 could fall by at least 2% if the annual rate of inflation rises from the 6.0% prior, and on the other side, the bank's analysts are expecting a stock rally if the reading comes in beneath the consensus 5.2%. Goldman's strategists explained that the "stock market wants a softer print as a hot reading will add more confusion/uncertainty into the equation of what the Fed does from here." Bloomberg adds the context that recent CPI reports have been generating an average +/- 1.9% for the S&P 500 on the day of the CPI release. We have further thoughts on the data within the Day Ahead section, below.


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  PREVIEW - BOC RATE DECISION (15:00BST/10:00EDT): The BoC is expected to keep rates unchanged at the 'terminal' rate of 4.5% in fitting with the central bank's guidance. This meeting will be accompanied by the latest MPR and the following press conference where any commentary on rate guidance throughout the rest of the year will be eyed, but the BoC will likely reiterate its "conditional pause" language. Growth expectations will likely be revised higher for Q1 23 as the Canadian economy appears more robust than previously thought, while updated inflation expectations from the BoC will be eyed to help gauge the next steps for policy after the "conditional pause", although the bar for rate hikes or cuts is quite high. Full Newsquawk Preview here.


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  PREVIEW - FOMC MEETING MINUTES (19:00BST/14:00EDT): Since the March FOMC, fears around the banking crisis have cooled, with no additional failures reported, reducing chances of an imminent policy shift from the Fed with the labour market still tight and inflation still well above target. WSJ reported that the March decision to hike was one of the closest calls at the FOMC in years, coming down to the wire as officials kept track of the fallout from SVB and questioned whether they should pause. Fed officials have since been cautious about getting ahead of, or forecasting, any sharp falls in credit availability, instead sticking to the status quo in terms of the need to bring down inflation whilst caveating that there is great uncertainty hanging over the banking sector. The minutes will provide us with more insight into how the recent banking failures played into the policy decision and the extent to which the overhang of the events may cap the degree that officials tighten further. Officials have been reticent to get into specifics about how much they see reduced bank lending as a substitute for Fed rate hikes, and it's unlikely the minutes will give us much either, although they should reveal a nod to the relationship as some officials have pondered in public comments lately. Full Newsquawk Preview here.

EQUITY NEWS:

FINANCIALS:

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  US Banks (BAC, C, JPM, WFC), First Republic Bank (FRC) - Banks that contributed the bulk of USD 30bln in deposits to First Republic plan to set aside about USD 100mln each in Q1 earnings in case of potential losses, Reuters reports. JPMorgan (JPM), Wells Fargo (WFC), Citigroup (C) and Bank of America (BAC) deposited USD 5bln apiece in uninsured deposits into FRC in March. Reuters adds that lenders typically earmark rainy day funds to prepare for soured loans, and notes that major US banks will begin reporting Q1 results from Friday.


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  Berkshire Hathaway Inc. (BRK.B) - Warren Buffet will be interviewed for three hours on CNBC today, between 0600-0900EDT.


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  Carlyle Group LP (CG) - Carlyle end talks with Veritas Capital to take a stake in health-care technology firm Cotiviti, which was valued at around USD 15bln with debt, Bloomberg reported. Carlyle attempted to negotiate a lower price before ultimately deciding not to move forward with the investment due to market conditions.


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  Citigroup Inc. (C) - Top dealmaker Mark Shafir is retiring from the investment bank, WSJ reports. Shafir most recently served as co-head of global M&A at Citi, and worked on a number of landmark deals, including Broadcom's USD 61bln deal to buy VMware, and Kroger's deal to buy Albertsons.


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  Crypto - Binance.US will remove digital asset tokens TRON and Spell from its trading platform, sending the prices of both down sharply on Wednesday, Reuters reported. Binance.US said the move was the result of a periodic review and that factors it regularly considers can include trading volume and liquidity, changes in a token's risk profile or evidence of fraud or unethical conduct, among others.


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  Credit Suisse (CS), UBS (UBSG) - Swiss Lower House voted to retrospectively reject the CHF 109bln Credit Suisse rescue package, follows the Upper House on Tuesday retrospectively approving the CHF 109bln of financial guarantees. Separately, the Swiss Finance Minister said that Credit Suisse experienced gigantic outflows during the weekend of the merger announcement. Elsewhere, UBS is reportedly considering retaining Credit Suisse's Indian private banking unit, Bloomberg said.


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  HSBC (HSBC) - HSBC's US unit has hired Silicon Valley Bank (SIVB) veterans to establish a dedicated banking practice, which will focus on the Healthcare and Tech sectors.


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  Deutsche Bank (DB) - The bank has offered severance packages to the remaining 500 IT staff on the payroll within Russia, as it winds down its remaining Russian operations, FT reports.

ENERGY:

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  Energy Inventories - The API was said to have reported headline crude stocks built by 0.4mln bbls in the week (exp. -0.6mln), with stocks at cushing drawing down by 1.4mln; gasoline inventories built by +0.5mln (exp. -1.6mln), while stocks of distillates drew down by 2mln (exp. -0.8mln).


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  Diamondback Energy, Inc. (FANG) - Diamond back reportedly working with advisors on the sale of non-core assets in the Western Permian Basin, as it looks to cash in on a potentially more active deal market in the US shale space, Bloomberg reports. BBG added that it was not clear what the assets might fetch in a sale.


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  Repsol SA (REPYY) - Q1 estimated production 608k BPD (prev. 551k BPD QQ), Q1 refining margin indicator within Spain USD 15.6/bbl (prev. 18.9bln Q/Q).


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  OMV AG (OMVKY) - Average realised crude oil price USD 78.00/bbl in Q1, NatGas EUR 35.1/MWh. Q1 total hydrocarbon sales volume 360k BOEPD.

INDUSTRIALS:

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  Emerson Electric Co. (EMR), National Instruments Corporation (NATI), Fortive Corporation (FTV) - Emerson is in advanced talks to acquire National Instruments for around USD 60/shr (vs Tuesday close of USD 52.58/shr), edging out smaller rival Fortive Corp. after a long pursuit, Bloomberg reports. An announcement could come as soon as this week.

MATERIALS:

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  Anglo American (NGLOY) - Rough diamond sales value for De Beers’ third sales cycle of 2023 amounted to USD 540mln (vs USD 497mln in Cycle 2 of 2023, and vs USD 566mln in Cycle 3 of 2022).

TECH:

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  Acer Incorporated (ACEYY) - March revenue +64.5% M/M to TWD 24.2bln; preliminary revenues for Q1 2023 TWD 52.46bln, which includes 29.6% business contribution from non-computer and display products, it said.


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  HP Inc. (HPQ) - A US appeals court revived a lawsuit alleging HP Inc defrauded shareholders by secretly using unprofitable tactics to boost sales of its printing supplies in 2015 and 2016, Reuters reports.

COMMUNICATIONS:

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  Microsoft Corporation (MSFT), Activision Blizzard, Inc. (ATVI) - A group of video gamers has re-filed a legal challenge to Microsoft's USD 69bln bid to buy Activision Blizzard, after a US judge last month rejected their suit, as it failed to present enough information to back claims the acquisition would harm industry competition.


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  Walt Disney Company (DIS) - Florida Governor Ron DeSantis's newly formed oversight board is seeking to assert control over development in two cities where Walt Disney World Resort is located, the latest twist in a battle for authority over the company's Florida theme parks, Reuters reports. A resolution would give the Central Florida Tourism Oversight District board the power to review and evaluate development in the 25k square acres of property in and around Disney's theme parks.


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  Universal Music Group (UNVGY) - Universal Music Group has told streaming platforms, including Spotify (SPOT) and Apple (AAPL), to block AI services from scraping melodies and lyrics from their copyrighted songs, FT reports.


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  Fox Corp. (FOXA) - Rupert Murdoch and Fox board members are being sued by an investor over stolen election claims, NBC reports. Fox Corp. and Fox News are set to go to trial next week in the USD 1.6bln defamation case brought by Dominion Voting Systems.


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  Twitter (unlisted) - CEO Elon Musk said the social media company was "roughly breaking even," as most of its advertisers have returned. Musk added that Twitter's impact from the decline in advertising was due to the cyclical nature of ad spending, some of which was political.

CONSUMER DISCRETIONARY:

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  Bed Bath & Beyond Inc. (BBBY) - Bed Bath & Beyond filed to sell 111.75mln shares of common stock. WSJ notes that over the past couple of months, it has issued more than 300mln shares through a complex equity deal, as it tries to sell hundreds of millions of additional shares directly into the market in a last-ditch attempt to avoid chapter 11; BBBY has said that the shares will likely be worthless if it files for bankruptcy.


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  Volvo AB (VLVLY) - Q1 prelim figures noted a record profit in the quarter; revenue SEK 131bln (exp. 118bln), Q1 adj. operating profit SEK 18.4bln (exp. 18.2bln).

CONSUMER STAPLES:

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  Procter & Gamble Company (PG) - P&G raises quarterly dividend to 0.941/shr (prev. 0.913/shr).


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  Carrefour SA (CRRFY) - Carrefour's Brazil unit has reached an agreement to reduce the price of its acquisition of Grupo Big by up to BRL 1bln.


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  L'Oreal (LRLCY), Alibaba (BABA) - Alibaba signed a three-year partnership with L'Oreal to make supply chains greener.

HEALTH CARE:

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  Indivior PLC (INVVY) - Received US FDA NDA supplemental 22 approval for Sublocade.

12 Apr 2023 - 09:30- Data- Source: Newsquawk