US equity futures are showing losses this morning: SPX -0.13%, Nasdaq -0.13%. The Dow is down 96 points while R2K falls 28 basis points. Brent crude is surging 220 basis points to around $98, gold drops 50 basis points, silver falls 30 basis points, and Bitcoin slides 100 basis points to ~$71.66K. The DXY is ticking up 13 basis points following several days of declines.
Treasuries are selling off with yields rising 2-3 basis points across the curve ahead of March CPI data that's expected to be very hot. The market is pricing in only 6 basis points of Fed rate cuts this year. Kevin Warsh's confirmation hearing, preliminarily planned for Thursday April 16th, will be pushed back (Punchbowl, CNBC).
There's still significant cynicism about the durability of the Middle East ceasefire, but if the détente's permanency outperforms expectations (which is our view), this will place further upward pressure on the SPX given lean long positioning and negative sentiment. However, the SPX has already bounced roughly 8% trough-to-peak in just a few days and is nearing the problematic 6900-7000 zone. While we're more optimistic than consensus on the ceasefire, the region will never return to pre-war conditions ($90 is probably the new $70 for Brent), and substantial stagflationary pressure is washing over the global economy from five weeks of fighting.
• The US is considering options to encourage ships to begin traveling through the Strait of Hormuz in greater numbers, though traffic remains very depressed (Axios)
• Trump told NBC News he was "very optimistic" about reaching a deal with Iran, saying Iranian leaders are "much more reasonable" in meetings than their public statements suggest (NBC)
• Trump is demanding commitments from NATO allies to help provide support for securing Hormuz (Reuters)
• China is playing a key role in helping negotiate Middle East peace, with Xi hoping this will set the stage for a successful Trump summit next month (WSJ)
BABA is pivoting towards monetizing its AI models rather than making them all open source (FT). TSM reported Q1 revenue up 35% to TWD1.13T, slightly ahead of Street forecasts of TWD1.12T, with March sales surging 45% year-over-year versus 22% in February (CNBC). TSLA is featured in the latest Barron's cover story discussing a potential SpaceX merger (Barron's). LITE CEO made bullish remarks about accelerating demand, stating the 2028 order book is filling up thanks to enormous hyperscaler capex (Bloomberg). SpaceX generated $6.5B of adjusted EBITDA but posted nearly $5B net loss on over $18.5B revenue due to massive depreciation and equity compensation (The Information). WDFC reported solid Q2 upside with EPS of $1.50 versus Street estimate of $1.43 and revenue of $161.7MM versus $155MM expected.
April 10 — US CPI for March at 8:30am ET (Street expects headline acceleration to +3.4% vs. +2.4% in February, core to +2.7% vs. +2.5%)
April 13 — China imports/exports for March
April 15 — US import/export prices for March
April 15 — Fed Beige Book
April 16 — China retail sales/industrial production for March
No specific earnings listed for this week in the newsletter.
Monday 4/13: GS (pre-market)
Tuesday 4/14: BLK, C, JNJ, JPM, KMX, WFC (pre-market); LVMH (post-market)
Wednesday 4/15: BAC, PNC, MS (pre-market); SLG (post-market); ASML, Hermes (European)
Thursday 4/16: ABT, BK, CFG, KEY, MRSH, PEP, SCHW, TRV, USB, TSMC (pre-market); AA, NFLX (post-market)
Friday 4/17: RF, STT, TFC (pre-market); Ericsson (European)