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WHAT YOU NEED TO KNOW!

GROWTH OF GLOBAL GOVERNMENT DEBT

• In 2020 Global Government Debt was ~$62T. Global GDP was ~ $84.96T.
• In 2022 Global Government Debt had grown to ~$82T with Global GDP approximating ~$104T.

This means debt grew by ~$20T while GDP growth grew by a corresponding ~$20T. $1 of debt growth equaling a $1 of economic GDP Growth.

Are we really growing GDP or just Debt?? Or has GDP become become nothing more than a measure of Debt Growth?

RESEARCH

RISING MARKETS BUT SHRINKING STOCK VOLUME?

• From Currencies, Bonds, Commodities; to economic indicators like inflation Swaps; to market measures like volatility - almost nothing doesn't have a leveraged derivative that can now be traded.
• There are some startling & secretive consequences of this that fortunes are being made from.
• The message is that economies and financial markets are not what they appear when you have quadrillions of derivative structures taking place behind the "veil". 

YET ANOTHER 800,000 JOBS REPORTING MISTAKE?

• The labor market is far weaker than conventionally believed. In fact, no less than 800,000 payrolls are "missing" when one uses the far more accurate Quarterly Census of Employment and Wages data rather than the BLS' woefully inaccurate and politically mandated monthly payrolls "data".
• If one looks back the monthly gains across most of 2023, one gets not 230K jobs added on average every month but rather 130K!
• When the issuance of $1 trillion in debt every 100 days only adds 800,000 less jobs it makes you wonder what the money is being used for???
• What is additionally alarming is that the Philly Fed found that the BLS had also overstated payrolls in 2022 by 1.1 million!
• This identifies where a significant part of the mysterious 5M job difference is between the BEA's Establishment Survey and Household jobs.

DEVELOPMENTS TO WATCH

AN INCREASINGLY DESPERATE XI JINPING SUMMONS US EXECUTIVES TO CHINA

• As Chinese Fixed Capital Formation and Foreign Direct Investment (FDI) continues to erode, President Xi Jinping is taking urgent measures to shore up foreign business and investment confidence.

XI JINPING ORDERS PBOC TO INJECT LIQUIDITY

• According to the the South China Morning Post, Xi Jinping has instructed the Chinese central bank to restart treasury-bond trades after a 2-decade hiatus.
• President Xi has told China’s financial cadres that an active monetary policy tool kit must include a controversial means of injecting liquidity into the economy.
• Economist says PBOC has not bought treasury bonds for years because monetary authorities did not want to fuel market speculation of a major stimulus.

GLOBAL ECONOMIC REPORTING

• PERSONAL CONSUMPTION EXPENDITURE (PCE)
• One of The Fed's favorite inflation indicators - Core PCE Deflator - was flat at +2.8% YoY in February (as expected) - the lowest since March 2021.
• The headline PCE Deflator stalled its disinflationary path, rising to +2.5% YoY (from +2.4%).
• Government Wage growth significantly stands out (chart right).

• DURABLE GOODS
• US Durable Goods (which in the US is primarily about Transportation and sporadically about Defense) have begun trending up.

In this week's expanded "Current Market Perspectives", we focus on a Q1 Recap of Winners & Losers, Gold and the Integrated Gold Miners.

=========

RISING MARKETS BUT SHRINKING STOCK VOLUME?

Markets have been steadily rising in a historic Bull Market since after the bottom was reached during the 2008 Financial Crisis.

With equities rising in such an appreciated fashion you would expect stock trading volumes to also be rising. But that hasn't been the case!

The chart to the right shows the steady drop in trading stock volumes.

One of a number of reasons for this is that there has been a major shift into buying Exchange Traded Funds (ETF).

Exchange funds use derivatives to execute their daily volumes.

EXPLODING USE OF DERIVATIVES

The chart below shows the massive increase in derivative trading volumes on a daily basis

IN THE US ALONE!

THE DERIVATIVE COMPLEX

The trading in derivatives far outstrips just what trades in equities. It occurs in all areas of the financial markets.

From Currencies, Bonds, Commodities to economic indicators like inflation Swaps to market measures like volatility - almost nothing doesn't have a leveraged derivative that can be traded.

There are some startling and secretive consequences of this that fortunes are being made from.

The message is that economies and financial markets are not what they appear when you have quadrillions of derivative structures taking place behind the "veil".

YET ANOTHER 800,000 JOBS REPORTING MISTAKE?

Statistics Don't Lie! But Statisticians Do!

I have been voicing my concern about the obvious Employment and Jobs Reporting games being played by the politically motivated Labor Department's BEA for a year and a half.

My arguments have been primarily targeted within two areas:

• The major difference between the BLS's "Headline" Establishment Survey versus the BLS's much more accurate Household Survey. (Chart Right: See the magnitude of growing 5 Million employment reporting variance from what used to track closely.)
• The incredibly low weekly Initial Jobless Claims report (produced by State Unemployment Insurance offices) versus both the State's "WARNS" reports and actual corporate layoff announcements.

LAST WEEK'S JOBLESS CLAIMS

Last week I outlined the magnitude of distortions occurring in the Jobless Claims reports originating from State controlled Unemployment Insurance offices in California and the week before in New York. Every week it is a revolving distortion from one "Blue" controlled state or another.

Here's what the most recent FOMC Minutes said about this:

"While the recent trends prior to the meeting had been remarkably positive, Fed officials judged that some of the recent improvement “reflected idiosyncratic movements in a few series.”

Even they aren't buying the "Here we go around the Mulberry Bush" routine - and neither should you!

THIS WEEK WE SHOW THE HOLES IN THE ESTABLISHMENT SURVEY

The labor market is far weaker than conventionally believed. In fact, no less than 800,000 payrolls are "missing" when one uses the far more accurate Quarterly Census of Employment and Wages data rather than the BLS' woefully inaccurate and politically mandated monthly payrolls "data".

The separately prepared Philadelphia Fed quarterly report on Early Benchmark Revisions of State Payroll Employment. shows that once again, the BLS has been fabricating jobs, and not just any jobs, but those that make up the all-important monthly payrolls reported by the government The primary purpose of this analysis, in the Philly Fed's own words is:

"to produce timely estimates of state payroll jobs that closely predict the annual benchmark revisions released by the BLS each March. To do so, we incorporate more comprehensive job estimates released by the BLS as part of its

Quarterly Census of Employment and Wages (QCEW) program."

So what happened this time? Well, the analysis, which looked at state-level data, found that the employment changes from June through September 2023 were significantly different in 27 states compared with pre-benchmark state estimates from the Bureau of Labor Statistics’ (BLS) Current Employment Statistics (CES).

Specifically, "early benchmark (EB) estimates indicated lower changes in 24 states, higher changes in three states, and lesser changes in the remaining 23 states and the District of Columbia"

RESULTS:

• If one looks back the monthly gains across most of 2023, one gets not 230K jobs added on average every month but rather 130K!
• When the issuance of $1 trillion in debt every 100 days only adds 800,000 less jobs, it makes you wonder what the money is being used for???
• What is particularly alarming is that the Philly Fed, found that the BLS had also overstated payrolls in 2022 by 1.1 million!, It's truly statistically remarkable how every time the data error is in favor of a stronger, if not fake, economy?
• This identifies where a significant part of the 5M job difference is between the Establishment Survey and Household jobs.

Which is also why nobody in the mainstream media, the government nor the deep state will ever mention this report.

REFERENCES: (If you really want to understand US Labor reality, then read these reports and not the headlines.)



Bureau of Labor Statistics (BLS)

• Monthly: Current Employment Statistics (CES)
• Quarterly: Quarterly Census of Employment & Wages (QCEW)
• Annually: Labor Benchmarks

Philadelphia Federal Reserve Bank

• Quarterly: Early Benchmark Revision of State Payroll Employment Report (Intended as a more accurate assessment of BLS's QCEW).

DEVELOPMENTS TO WATCH

AN INCREASINGLY DESPERATE XI JINPING SUMMONS US EXECUTIVES TO CHINA

I have written many times about the fact that China is so dependent of Capital Formation. The Achilles Heel of the US is being a dependent 70% consumption economy. The Achilles Heel of China is being a dependent ~45.5% Capital Formation economy in 2011, having fallen to just over 41.9% in 2022, according to the World Bank. Chinese Foreign Direct Investment (FDI) has been plummeting over the last two years, as Xi Jinping's policies have become increasingly threatening to foreign corporations and financiers.

When corporations and financiers slow their investment rate in China, or start taking their profits & investments out of China, the economy slows dramatically. This is just one of the problems that President Xi Jinping currently faces.

To stem the issue, Xi Jinping met with 500 US business leaders in San Francisco in November. As the problem worsens, he again summoned a select group of US investors to Beijing last week in an attempt to shore up confidence. Separately, US-China tensions are reported as having recently risen as Washington contemplates labeling Chinese electric vehicles as a "security risk" to Americans. 

State media outlet Xinhua noted the meeting was held at the Great Hall of the People in Beijing. Xi and the CEOs, included:

• Raj Subramaniam, CEO of FedEx Corp.
• Evan Greenberg, CEO of the insurer Chubb Ltd.
• Stephen Orlins, president of the National Committee on US-China Relations
• Craig Allen, president of the US-China Business Council and
• Mark Carney, chairman of Bloomberg Inc.
• Stephen Schwarzman, Partner, Blackstone Inc (According to Bloomberg)
• Cristiano Amon, CEO of Qualcomm (According to Bloomberg)
• ... and others not identified nor reported on?

A Bloomberg source quoted Xi as saying "there is no need for a 'decoupling' between Beijing and Washington". 

XI JINPING ORDERS PBOC TO INJECT LIQUIDITY

According to the the South China Morning Post, Xi Jinping has instructed the Chinese central bank to restart treasury-bond trades after a 2-decade hiatus.

• President Xi has told China’s financial cadres that an active monetary policy tool kit must include a controversial means of injecting liquidity into the economy.
• Economist says PBOC has not bought treasury bonds for years because monetary authorities did not want to fuel market speculation of a major stimulus.

It appears to be just a matter of time before China’s central bank pulls out a controversial monetary policy tool that it has not used in more than two decades, following newly publicized instructions from President Xi Jinping. With the world’s second-largest economy at a critical juncture of fueling growth in its bid to become a global financial superpower, a new book details some of Xi’s thoughts on finance, dating back to late 2012.

"The People's Bank of China must slowly increase the trading of treasury bonds in its open market operations,"

... Xi told a major financial meeting in October in a speech that was not published at the time but was included in a

book this month.

Market expectations remain high for more stimulus to boost the world's second-largest economy, which is showing tentative signs of momentum despite a long-running debt crisis in the property sector, which used to account for a quarter of China's gross domestic product.

NOTE: The chart above right is the current Chinese Credit Impulse prior to the Xi Jinping's address. The dared chart below reflects the critical importance of the Chinese Credit Impulse to the Global Economy.

GLOBAL ECONOMIC INDICATORS: What This Week's Key Global Economic Releases Tell Us

PERSONAL CONSUMPTION EXPENDITURE (PCE)

One of The Fed's favorite inflation indicators - Core PCE Deflator - was flat at +2.8% YoY in February (as expected) - the lowest since March 2021.

The headline PCE Deflator stalled its disinflationary path, rising to +2.5% YoY (from +2.4%).

• Durable Goods deflation slowed and non-durable goods inflation picked up in February.
• The SuperCore (Services inflation ex-Shelter) - remains stalled around +3.33% YoY (up 0.18% MoM)...
• SuperCore M-o-M tumbled significantly (as Healthcare cost inflation fell and Other Services prices deflated).
• Income and Spending both rose in February with spending far outpacing income (+0.8% MoM vs +0.3% MoM respectively). On a YoY basis, spending is once again outpacing income growth.
• Government workers' record wage growth in January was revised lower. Government wages grew 8.1% in Feb, up from a downward revised 7.9% in Jan and below the record high of 8.9% in December.
• Private wages grew 5.4% in Feb, up from 5.3% in Jan and back to their pre-covid growth rates.
• As one would expect with that level of spending, the savings rate collapsed to its lowest since Dec 2022.
• Here's why - government handouts rose significantly once again (+$39BN MoM).
• Finally, while the markets are exuberant at the survey-based disinflation, the vast majority of the reduction in inflation has been 'cyclical'...
• Acyclical Core PCE inflation remains extremely high, although it has fallen from its highs.
• Is The (apolitical) Fed really going to cut rates 4 times this year with a background of strong growth (GDP) and still high Acyclical inflation?

DURABLE GOODS

Headline durable goods rose 1.4% in February, above the 1.1% forecast and rising from the downwardly revised -6.9% (initially -6.2%).



Ex-Defense durables led the upside, rising 2.2% from the prior -7.9% while ex-transport rose 0.5%, above the 0.4% forecast and above the prior revised up -0.3% (initially -0.4%).

• Meanwhile, transportation equipment rose 3.3% after two consecutive monthly decreases. Shipments rose 1.2% after a 0.8% decrease.
• The nondefense capital goods orders ex aircraft rose 0.7%, above the 0.1% forecast and prior -0.4%.
• A rebound in volatile aircraft orders helped support the headline figure but there may be worries ahead with ongoing issues at Boeing with the CFO recently noting they do not know when the 737 production rates will ramp up, noting they have made the decision to keep production below 38/month.
• Since then, the Boeing (BA) CEO Calhoun announced he is to step down at the end of the year.
• Pantheon Macroeconomics highlights that "The only input from the durable goods report into the business equipment investment component of the GDP accounts is nondefense capital goods shipments ex-aircraft, aka core capex shipments".
• This component fell by 0.4%, easing from the prior 0.7% gain in January.
• Pantheon adds that they expect "a further drop of about 0.5% in March, given that shipments continued to run ahead of orders in February, and the ISM manufacturing survey continues to point to weak underlying demand".
• This suggests to the consultancy that real core goods shipments are on course for a 2% Q/Q annualized drop in Q1.
• Nonetheless, PM notes a rebound in heavy truck sales which points to a 2.5% gain in overall equipment investment in Q1, despite the likely fall in core capex shipments.
• The desk continued to expect a 1% drop in real equipment investment this year, contributing to the slowdown in GDP growth.

GLOBAL MACRO

WHAT DOES YOUR SCAN OF THE DATA BELOW TELL YOU? - THE MEDIA AVOIDS BAD NEWS!

We present the data in a way you can quickly see what is happening.

THIS WEEK WE SAW

Exp=Expectations, Rev=Revision, Prev=Previous

EXCITEMENT GROWING IN GOLD, BITCOIN, & ENERGY (ANTI-CURRRENCY PLAYS)

RECORD QUARTER FOR THE HISTORY BOOKS

Click All Charts to Enlarge

GOLD: Continues pushing higher, now trading at levels we have never closed at! The close here or higher risks creating a lot of frustration as we continue holding (and broke through Thursday) the upper part of the trend channel (dip buyers aren't getting filled).

1 - SITUATIONAL ANALYSIS

Q1 RECAP

• Nearly 40% of all trading days in Q1 were record closing highs for the S&P 500. Most since Q1 2013.
• The S&P 500 has had 4 more up days than down days this year (32 versus 28), and those are the difference between the index being up 4 pct rather than its actual YTD price return of 10 pct. Two of those days were driven by NVDA and TSM. One was the day after the January Fed meeting. The last one was 5 days into the new year, a momentum carryover from 2023.
• The Public is Increasingly Getting into Stocks:
• Retail traders net bought $7.7B this past week, +2.4 standard deviations above the last 12M average. (Chart Right Top)
• FINRA margin debt vs NYSE. (Chart Right Bottom)

Q1 WINNERS v LOSERS

Strong start to 2024 with a clear cyclical tilt. Mag-7, US stocks main drivers so far in 2024, while clean energy has disappointed (Chart Below).

MARKET CONFIDENCE BUILT ON EARNINGS GROWTH , FED PIVOT & NO RECESSION

Rising earnings outlooks is assisting in supporting a strong "Risk-On" sentiment (chart right).

Earnings is supported by increasing GDP growth outlooks and improving Leading Earnings Indicators (below left).

Morgan Stanley analysts (below right) are fairly representative of the Sell Side consensus.

2 - FUNDAMENTAL ANALYSIS

RISING S&P 500 PE RATIOS

The aggregate P/E has increased from 17x in late October to 21x and currently ranks in the 90th percentile since 1985. However, the latest leg of valuation expansion has not been confined to the mega-cap stocks. The equal-weight S&P 500 ("SPW") P/E has also increased from 14x to 17x and now ranks in the 92nd percentile. (Chart Right)

The S&P 500's P/E ratio has moved up to 24.4x from 22.3x at the start of the year. That's 32% higher than the historical median P/E going back to 1988 (18.5x). (Chart Below)

CREDIT MARKETS

Since Credit always leads markets, we are watching it closely. This includes:

1. Inverted yield curves
2. Negative swap spreads
3. Collateral shortages
4. Tightening of credit standards by banks and
5. Reduced commercial lending
6. The High Yield Corporate "JNK" Market. (BELOW)

THE HIGH YIELD CORPORATE "JNK" MARKET

It appears that the Credit Markets are approaching the conclusion of their major corrective consolidation. Appears likely to be complete over the next 90 days.

YOUR DESKTOP / TABLET / PHONE ANNOTATED CHART

Macro Analytics Chart Above:  SUBSCRIBER LINK

3 - TECHNICAL ANALYSIS

THE HEADLINE MARKET: MAGNIFICENT 7

• We have reached the vertical lift part of the parabolic (geometric) lift shown by the dashed red line.
• We have Divergence with momentum (bottom pane).
• Momentum appears to be rolling over (bottom pane).

MATASII CROSS: WEEKLY - CONTINUES TO SIGNAL A MAG-7 BUY

YOUR DESKTOP / TABLET / PHONE ANNOTATED CHART

Macro Analytics Chart Above:  SUBSCRIBER LINK

"CURRENCY" MARKET (Currency, Gold, Black Gold (Oil) & Bitcoin)

CONTROL PACKAGE

There are EIGHT charts we have outlined in prior chart packages that we will continue to watch closely as a "control set".

1. US DOLLAR -DXY - MONTHLY (CHART LINK)
2. US DOLLAR - DXY - DAILY (CHART LINK)
3. GOLD - DAILY (CHART LINK)
4. GOLD cfd's - DAILY (CHART LINK)
5. GOLD - Integrated - Barrick Gold (CHART LINK)
6. OIL - XLE - MONTHLY (CHART LINK)
7. OIL - WTIC - MONTHLY - (CHART LINK)
8. BITCOIN - BTCUSD -WEEKLY (CHART LINK)

INTEGRATED GOLD MINERS

We have a close eye on Gold and the INTEGRATED GOLD MINERS as represented by Barrick Gold. Barrick has broken out of its long term declining overhead resistance trend.

YOUR DESKTOP / TABLET / PHONE ANNOTATED CHART

Macro Analytics Chart Above:  SUBSCRIBER LINK

US EQUITY MARKETS

CONTROL PACKAGE

There have FIVE charts we have outlined in prior chart packages that we will continue to watch closely as a "control set".

1. The S&P 500 (CHART LINK)
2. The DJIA (CHART LINK)
3. The Russell 2000 through the IWM ETF (CHART LINK),
4. The MAGNIFICENT SEVEN (CHART ABOVE WITH MATASII CROSS - LINK)
5. Nvidia (NVDA) (CHART LINK)

S&P 500 CFD

YOUR DESKTOP / TABLET / PHONE ANNOTATED CHART

Macro Analytics Chart Above:  SUBSCRIBER LINK

S&P 500 - Daily - Our Though Experiment

Our Though Experiment, which we have discussed previously, suggests we have put in a near term top (or very close to it) and will now consolidate before possibly completing one final small impulse higher or put in a 1-2 Wave of a much higher degree.

NOTE: To reiterate what I previously wrote - "the black labeled activity shown below, between now and July, looks like a "Killing Field" where the algos take Day Traders, "Dip Buyers", "Gamma Guys" and FOMO's all out on stretchers!"

YOUR DESKTOP / TABLET / PHONE ANNOTATED CHART

Macro Analytics Chart Above:  SUBSCRIBER LINK

STOCK MONITOR: What We Spotted

MONDAY

• Stocks were ultimately red on Monday, although well off the morning lows.
• The RUT closed green on account of energy sector outperformance with crude prices rising.
• Lows were seen in the futures pre-market with tech downside leading on several key reports; chip names AMD and INTC were initially hit on China phasing out US microprocessors from government PCs and servers.
• Nvidia was lower pre-market after GOOG, INTC and QCOM announced they were planning to battle NVDA's dominance in AI.
• Meanwhile, the EU is also opening investigations into big tech names.
• Nonetheless, a lot of these stocks pared earlier weakness which helped the Nasdaq recover to finish only slightly lower.
• Treasuries were lower across the curve ahead of supply this week as well as some key data & Fed speakers, including Waller on Wednesday, while Powell speaks on Good Friday, after the PCE data.
• There was a slew of Fed speakers, Bostic after-hours on Friday was hawkish noting he now only sees one cut this year (prev. two), while Goolsbee echoed Powell by noting the inflation reports do not change the overall picture.
• Cook stuck to the script, noting risks between meeting the dual mandate are coming back into better balance.
• Data saw US existing home sales marginally miss expectations while the US 2yr treasury auction was in line with recent averages.
• In FX, the Dollar was sold while Yuan was bid after a firmer PBoC fixing overnight and on reports of State-owned banks selling Dollars after the notable weakness seen at the tail end of last week.
• The Aussie also prospered on the Yuan strength while the Yen was ultimately flat despite officials jawboning overnight.
• Japan's top currency diplomat Kanda says he has been closely watching FX moves with a high sense of urgency and will take appropriate steps to respond to excessive weakness of yen without excluding any measures.
• Crude prices were bid on rising geopolitical tensions after the Moscow terrorist attack and also on supply updates, after Reuters reported that Russia has told oil companies to cut output to 9mln BPD by the end of June, in line with OPEC+ pledges.

INFLATION BREAKEVENS: 5yr BEI -0.4bps at 2.393%, 10yr BEI -0.8bps at 2.347%, 30yr BEI -1.7bps at 2.281%

REAL RATES: 10Y -- 1.9087%

STOCK SPECIFIC

• Boeing (BA) +1.5%: CEO Calhoun intends to step down at end-2024. CEO said hopefully they will see a deal soon with Spirit AeroSystems (SPR) +1.3%.
• Apple (AAPL) -1%: Ended its project to develop microLED displays.
• Intel (INTC) -1.5% AMD (AMD) -0.5%: China implements new guidelines to phase out US microprocessors like Intel and AMD from government PCs and servers.
• United Airlines (UAL) -3.5%: US aviation regulators mull severe measures to limit United Airlines' expansion.
• Nvidia (NVDA) +1%: Google (GOOGL), Intel (INTC), Qualcomm (QCOM) execs say they plan to battle Nvidia AI dominance through the UXL Foundation.
• Regeneron (REGN) -0.5%: US FDA declines to approve Cos. blood cancer therapy.
• Vista Outdoor (VSTO) +3%: MNC Capital has reportedly lifted its bid for the Co. to USD 37.50/shr (prev. USD 35/shr) or USD 3bln, according to the New York Times.
• Masimo (MASI) +3.5%: To evaluate a spin-off of its consumer business.
• Cleveland-Cliffs (CLF) +1%: To receive up to USD 575mln in DoE investments.
• Foot Locker (FL) +6%: Upgraded at Evercore after meeting with the Cos. management team last week.
• Lucid (LCID) +5.5%: Saudi PIF affiliate Ayar has agreed to buy USD 1.0bln of newly created series of convertible preferred stock of Lucid.

TUESDAY

• Stocks ultimately finished the session in the red with a late session sell off, which saw sectors primarily in negative territory with only Health Care, Financials and Consumer Staples in the green.
• Utilities, Energy and Tech underperformed.
• T-Notes were choppy with initial weakness seen in response to the stronger than expected Durable Goods data before a gradual reversal into settlement, aided by a strong 5yr auction.
• Crude prices slid lower with ongoing geopolitics in the limelight ahead of OPEC JMMC next week, although sources on Tuesday suggested no change to policy.
• In FX, the Dollar was flat despite a hefty bid into the London fix as we approach month/quarter end while the Swissy was the G10 laggard with little action seen elsewhere. Bitcoin was sold and gold saw slight upside.

INFLATION BREAKEVENS: 5yr BEI -2.8bps at 2.362%, 10yr BEI -1.8bps at 2.328%, 30yr BEI -0.8bps at 2.273%

REAL RATES: 10Y -- 1.9137%

STOCK SPECIFIC

• Apple (AAPL) -0.5%: China iPhone shipments fell about 33% in February, but it was previously flagged it would be affected by the later timing of the Lunar New Year. Note, earlier it was reported shipments of total smartphones within China -31.3% Y/Y.
• Krispy Kreme (DNUT) +39.5%: McDonalds (MCD) is to sell Krispy Kreme donuts in their US restaurants.
• McCormick & Company (MKC) +10.5%: EPS and revenue beat while it reaffirmed the FY24 outlook.
• Dell Technologies (DELL) +1.5%: Said despite near-term challenges, expects demand environment to improve in fiscal 2025 enabling net revenue growth for full fiscal year.
• Baidu (BIDU) -2%: Some sources deny Apple & Baidu have reached an AI cooperation deal, according to AppleInsider citing Chinese media.
• Viking Therapeutics (VKTX) +17%: Positive results from Phase 1 clinical trial of oral tablet formulation of dual GLP-1/GIP receptor agonist VK2735; Phase 2 trial in obesity planned for H2 '24.
• Seagate (STX) +7.5%: Upgraded at Morgan Stanley.
• Spotify (SPOT) +0.5%: Added to BofA Securities US 1 list, replacing Netflix (NFLX).
• Tesla (TSLA) +3%: Offers one-month trials for its Full Self-Driving (FSD) to US customers. In other news, Il Sole 24 Ore reports officials at Italy's Industry Ministry have contacted Tesla about possibly producing electric trucks in the country.
• Ford (F) -3.5%: CFO says Baltimore Bridge collapse is to affect supply chain; Co. is looking to re-route car parts to other east coast ports.
• Shockwave Medical (SWAV) +10%: Johnson & Johnson (JNJ) considering deal for SWAV, according to WSJ; adds a deal could be finalized in the coming weeks, assuming talks don’t fall apart, and it is also possible another suitor could emerge.
• Trump Media (DJT) +16%: Shares surged in its first trading day on the Nasdaq.

WEDNESDAY

• Stocks were firmer on Wednesday thanks to a late session rip into the close with month-end selling not as large as expected, perhaps indicative of the bulk of it being in the rearview now ahead of the long weekend.
• There was no tier one data or major catalysts to set the tone ahead of Fed's Waller later at the Economic Club of NY on Wednesday at 18:00ET.
• Treasuries rallied further, ultimately in a bull-flattener in thin trade, where the strong 7yr auction marked the low in yields for the session.
• The Dollar Index was flat, while the Yen closed marginally firmer after more Japanese official commentary/actions that are believed to preface FX intervention.
• Euro was flat, despite some strong gains in EGBs, coming on the heels of the as-expected rise in headline Spanish CPI, and a softer core reading, ahead of other EU member state figures due next week.
• Gold was ultimately firmer, aided by the lower yields, but did see some notable weakness earlier on Reuters reports India had slashed its gold imports for the latest month by 90% amid high prices.
• Oil prices were lower, albeit closed off worst levels, amid bearish US inventory figures in a holiday-thinning trading environment.

INFLATION BREAKEVENS: 5yr BEI -2.1bps at 2.351%, 10yr BEI -1.8bps at 2.320%, 30yr BEI -1.1bps at 2.270%

REAL RATES: 10Y -- 1.8382%

STOCK SPECIFIC

• Novocure (NVCR) +12%: METIS Phase 3 clinical trial met primary endpoint in NSCLC study.
• nCino (NCNO) +19%: EPS beat, with Q1 and FY25 outlook surpassing expectations.
• Marvell (MRVL) +6%: Citi opens a 'positive catalyst watch' on Marvell into AI event.
• GameStop (GME) -15%: Top and bottom-line light and said it has recently undertaken cost reduction measures to improve efficiency, including initiatives to reduce headcount.
• NIO (NIO) -2.5%: Cuts Q1 delivery view to about 30k (prev. 31-33k) vehicles in Q1'24.
• Merck (MRK) +5%: FDA approved Co.'s life-threatening lung condition treatment for use among adults with pulmonary arterial hypertension.
• Cintas (CTAS) +8%: EPS, revenue, and gross margin beat alongside lifting FY outlook.
• Coinbase (COIN) -4%: Downside attributed to court update that the Coinbase case has not been dismissed; Court denies COIN motion for judgement.
• Robinhood (HOOD) +4%: Introduced its Robinhood Gold Card, a credit card where cash back can be deposited into a brokerage account.
• Trump Media & Technology Group (DJT) +14%: Shares of former President Trump’s social media firm soared, adding to their strong gains from their debut under the DJT ticker on Tuesday.
• Regional Banks: S&P said some US regional banks could see asset quality and performance hit by stresses in commercial real estate. Accordingly, the credit rating agency lowered its outlook on five lenders to negative from stable. Those five were: First Commonwealth Financial (FCF), M&T Bank (MTB), Synovus Financial (SNV), Trustmark (TRMK) and Valley National Bancorp (VLY).

THURSDAY

• Stocks were little changed on Thursday with no major swings in either direction to pin on month-end flows.
• However, Treasuries saw pronounced flattening after the late Wednesday hawkish Waller speech which was followed by a month-end grab for duration ahead of PCE and Powell.
• The duration bid into the European close was also heightened after the third-lowest Chicago PMI reading post-COVID was followed by downward revisions to the Michigan survey's consumer inflation expectations.
• That data came after the low-sided jobless claims figures and upward revisions to Q4 US GDP, albeit the PCE Prices did see a slight downward revision.
• The Dollar was little changed with the Euro an underperformer after poor German retail sales figures, not to mention some late session dovish remarks from ECB's Villeroy.
• Futures are now closing up for the week with FX the only thing open for Friday's PCE, Powell, and Daly comments.
• In commodities, oil futures ripped higher into the long weekend in the absence of an obvious catalyst, marking their third consecutive week of gains.
• Gold also saw strong gains, breaching beyond the mid-March all-time highs.

INFLATION BREAKEVENS:  5yr BEI +1.7bps at 2.366%, 10yr BEI +1.5bps at 2.332%, 30yr BEI +1.1bps at 2.277%.

REAL RATES: 10Y -- 1.9037%

STOCK SPECIFIC

• Walgreens (WBA) +3.3%: EPS and revenue beat, but cut FY EPS view citing "challenging retail environment in the US".
• Estee Lauder (EL) +6.4%: Upgraded at Bank of America, who state earnings have bottomed.
• RH (RH) +14%: Although it fell short on both EPS and revenue, it is forecasting better-than-expected revenue growth in 2024 thanks to improving demand trends.
• Chemours (CC) -9%: Cooperating with authorities concerning its internal audit of its financial practices.
• Solventum (SOLV) and GE Vernova (GEV) will be added to the S&P 500, replacing VF Corp. (VFC) and Dentsply Sirona (XRAY), respectively.
• B. Riley Financial (RILY) +12%: Secures extension under existing credit agreement.
• Home Depot (HD) -0.5%: Has entered into a definitive agreement to acquire SRS Distribution for a total enterprise value of approx. USD 18.25bln.
• Verint Systems (VRNT) +6.5%: Top and bottom line beat alongside raising its FY outlook to reflect AI momentum.
• Braze (BRZE) -12%: Next quarter and FY profit guidance was light.
• MillerKnoll (MLKN) -19%: Revenue missed accompanied by downbeat comms. with next quarter and FY guidance disappointing.
• AMC Entertainment (AMC) -14%: Files to sell up to USD 250mln in common stock.
• Apple (AAPL) -1%: Set to release new iPad models in May after long wait; to release 12.9-inch iPad Air and OLED version of iPad Pro; suppliers are ramping up production ahead of launch, according to Bloomberg.
• Disney (DIS) +1%: Blackwells Capital sues Disney (DIS) in Delaware court to seek books and records to determine possible disclosure violations in its dealings with hedge fund ValueAct, via Court Filing.

BOND MARKET

CONTROL PACKAGE

There have FIVE charts we have outlined in prior chart packages that we will continue to watch closely as a "control set".

1. The 10Y TREASURY NOTE YIELD - TNX - HOURLY (CHART LINK)
2. The 10Y TREASURY NOTE YIELD - TNX - DAILY (CHART LINK)
3. The 10Y TREASURY NOTE YIELD - TNX - WEEKLY (CHART LINK)
4. The 30Y TREASURY BOND YIELD - TNX - WEEKLY (CHART LINK)
5. REAL RATES (CHART LINK)

FISHER'S EQUATION = 10Y Yield = 10Y INFLATION BE% +REAL % = 2.332% + 1.9037% = 4.235%

As rate-cut expectations fell from 6 this year to 3, Treasury yields rose... non-stop... all week with the belly of the curve underperforming (5Y yields up 28bps on the week). Yields all ended back up near their year-to-date highs.

YOUR DESKTOP / TABLET / PHONE ANNOTATED CHART

Macro Analytics Chart Above:  SUBSCRIBER LINK

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2020 VIDEOS OUTLINING THE COMING RISE IN INFLATION, STAGLFLATION & COMMODITY PRICES

THE REGULATORY STATE

RELEASED - 01-17-24 --- 212 Page Paper

FULL 212 PAGE PDF DOWNLOAD