Economic Data and Market Highlights
Global equity markets rose during this week with strong earnings releases and forecasts from Alphabet and Microsoft. Tesla reported poor results but noted that the company would be releasing cheaper models sooner than expected causing the stock to jump over 18 percent for the week. Meta struggled as it noted its capital expenditure spend will be higher than forecast. The MSCI All Country World Index rose 2.64% while the S&P 500 rose 2.678% for the week.
US economic growth down, close to a two year low in Q1 of 2024 with GDP increasing at an annualized rate of 1.6%. Personal spending rose at a lower-than-expected rate of 2.5% while trade deficits hit growth as well. Core inflation in Q1 accelerated to 3.7%.
The Fed is scheduled to meet on Wednesday of this week. Given the acceleration of inflation, the likelihood of a cut at this meeting, is less than 50% as of Friday. Given the time needed for more certainty by the Fed to ensure that inflation is in check coupled with the upcoming Presidential election, make it unlikely that the Fed will make a change before it’s November meeting.
Chinese industrial firm profits continued their downward trend in March, going negative for the first time since July 2023. Industrial profits at large scale chines companies fell 3.5% YoY in March according to data published by the National Bureau of Statistics on Saturday while profits rose 4.3% YTD to 1.51T yuan or $208B.
The number of failed real estate deals in Europe has risen to its highest level since the global financial crisis per MSCI Real Assets on Thursday. Europe’s property has been impacted by rising debt costs and falling prices as high streets and offices were impacted by the pandemic. Data showed termination of property deals worth more than five million euros were plentiful and “for-sale” properties taken off the market spiked to the highest level since 2010. The total value of European commercial property sales also fell by 26% in Q1 compared to last year which is the lowest since 2011 and the seventh straight quarter of declines.
We have added the Bloomberg Galaxy Bitcoin benchmark to the data page of this report. It’s worth noting the performance of bitcoin has trounced the S&P 500 over the last 12 months (131.9% versus 27.71%) but over the last three years, the S&P 500 has bested the bitcoin benchmark 8.47% versus 5.79%. Citi released an analysis this past week related to the holders of bitcoin ETF. While some hedge funds still need to report and institutional holders will likely increase, investment advisers have not yet adopted the asset as part of their clients’ portfolios. The note points out that this could increase the amount of volatility as holders (mostly retail) approach their cost basis.
Finally, on Friday after the market close, banking regulators seized the assets of First Republic Bank, after its’ board could not find additional capital. The banks assets were then taken over by Fulton Bank based in Lancaster PA. First Republic had approximately $6 billion in assets at the time of seizure.
The Past Week’s notable US data points
Data Source: Blackrock, Bloomberg, Charles Schwab, CNBC, Goldman Sachs, J.P. Morgan, Morningstar, Morgan Stanley, Standard & Poor’s, and the Wall Street Journal.
Authors:
Jon Chesshire, Managing Director, Head of Research
Michael McNamara, Analyst
Sam Morris, Analyst