Yesterday saw the release of the US producer price index for April and comments from the head of the US central bank. Powell again roughly said that inflation is cooling, but it's not quite there yet, so investors shouldn’t get carried away. He hinted that the Fed likely isn’t going to raise rates and that cuts will be coming, eventually. A little earlier, the Producer Price Index (PPI) created some contradictory feelings, because the prices of finished goods and services sold by producers rose by 0.5% between March and April, much more than expected (0.3%). However, the data was revised down in March from +0.2% to -0.1%. Don't ask me why there's been such a discrepancy (which looks like nothing but is statistically considerable), I haven't found the explanation. So, based on the previous month's corrected prices, the rise isn't that great after all, and even a little less than the market feared. What's more, some of the PPI components that influence the overall inflation figure (CPI) were a little weaker than expected.

Today, the US CPI for April was just published, and it came in below expectations at +0.3% on a monthly basis, while economists were expecting a monthly average rise of 0.4%. They also expected a 0.3% gain for core inflation, which is what today’s figures revealed, marking a slowdown compared with recent months. Retail sales were also published this morning and remained steady in April at 0.4%. This cheered up investors, sending futures sharply higher. Equity markets are still playing on the imminent arrival of a period of cheaper money, thanks to the start of a cycle of rate cuts by the major central banks. The movement is getting closer in the eurozone and the UK. It is a little further away in the US, since price and labor market tensions are complicating the Fed's job. This is why investors are so excited by the slightest data or statement that could tip the balance in the direction of a first rate cut.

There's a lot going on outside the US too. China is firing on all cylinders. The local central bank has chosen to leave its key rate unchanged, but it's the rumored bailout of the property sector that's making headlines. Beijing could encourage local authorities to buy up tens of thousands of empty homes at low prices to help developers get out of the rut. If confirmed, this project would outstrip everything that has so far been tried and failed to revive this sector of the economy, which accounts for over 20% of China's GDP. It would come at a time when the United States has just dramatically tightened its policy on imports of products from the country's industry. At the same time, Vladimir Putin is visiting China on Thursday and Friday to meet Xi Jinping and discuss trade, geopolitics and the war in Ukraine. The relationship between the two countries continues to strengthen, particularly in terms of import-export.

On equity markets, the US meme stocks craze continues. It seems that retail investors have been bored ever since bitcoin decided to stay glued to the USD 60,000 mark. GameStop, for example, gained 60% yesterday, after taking 74% the day before. It was also a party for the small players in the US solar industry, following the tariffs imposed by Washington on Chinese imports of photovoltaic cells. In the technology segment, Alphabet unveiled the new AI functionalities of the Google search engine.

Asian markets are more cautious than Wall Street this morning. Japan and South Korea are near zero, and India is slightly down. Chinese markets continue to react with bewilderment. Despite some positive news for the real estate sector, the indices lost their initial gains and ended the day slightly down. Australia fared better, gaining 0.4% at the bell. European leading indicators are bullish, with the Stoxx EU 600 up 0.3%.

Economic highlights of the day:

Today’s main indicators are the April consumer price index, Empire State manufacturing index and retail sales, as well as business inventories and the NAHB housing market index, before crude oil inventories according to the Energy Department. The full agenda is here.

The dollar is down to EUR 0.9206 and GBP 0.7908. The ounce of gold is trading at USD 2373. Oil is also down, with North Sea Brent at USD 82.01 a barrel and US light crude WTI at USD 77.45. The yield on 10-year US debt falls to 4.36%. Bitcoin is trading at USD 63,000.

In corporate news:

  • Boeing - The U.S. Department of Justice announced on Tuesday that the aircraft manufacturer had failed to comply with the settlement reached in 2021 after the 737 MAX accidents in 2018 and 2019, which claimed 346 lives. Boeing is accused of failing to “design, implement and enforce a compliance and ethics program to prevent and detect violations of U.S. fraud laws throughout its operations”. The share price is down 1.2% in pre-market trading.
  • Amazon - The group's Web Services (AWS) division announced on Wednesday that it intends to invest 7.8 billion euros in Germany until 2040, as part of the development of a cloud computing infrastructure specifically for Europe.
  • Tesla plans to cut a further 601 jobs in California, according to a notice sent to the state authorities. The automaker is facing declining sales and intensifying competition, marked by a price war.
  • Microsoft - The co-founder and scientific director of OpenAI, Ilya Sutskever, has decided to leave the artificial intelligence startup, of which Microsoft is a shareholder.
  • Artificial Intelligence - A bipartisan group of U.S. senators, including Democratic Majority Leader Chuck Schumer, called Wednesday for a sharp increase in public funding for artificial intelligence research.
  • Coinbase, Bitfarms - Shares in cryptocurrency and blockchain-related companies are up in pre-market trading, boosted by bitcoin's advance. Coinbase Global gains 1.2%, while US-listed operator Bitfarms' shares advance by around 16%.
  • GameStop and AMC Entertainment are up 14.5% and 11.7% in pre-market trading, respectively, continuing this week's rally after the return on social networks of Keith Gill, who calls himself “Roaring Kitty”, a central figure in the stock market frenzy of 2021.
  • Robinhood - The stock of the retail trading app gains 1.6% in pre-market trading on renewed interest in “meme stocks”.

Analyst recommendations:

  • Accenture Plc: Deutsche Bank downgrades to hold from buy with a price target reduced from USD 409 to USD 295.
  • Albemarle Corporation: Baptista Research downgrades to hold from outperform with a price target raised from USD 140.60 to USD 146.50.
  • Arista Networks, Inc.: William O'Neil & Co Incorporated upgrades to buy from dropped coverage.
  • Devon Energy Corporation: Baptista Research downgrades to hold from outperform with a price target raised from USD 51.50 to USD 56.40.
  • Garmin Ltd.: Baptista Research downgrades to underperform from hold with a price target raised from USD 150 to USD 154.
  • 3M Company: Melius Research LLC maintains its hold recommendation and raises the target price from USD 92 to USD 111.
  • Trane Technologies Plc: Melius Research LLC maintains its buy recommendation and raises the target price from USD 291 to USD 350.
  • Marathon Oil Corporation: Baptista Research upgrades to outperform from buy with a price target raised from USD 31.70 to USD 32.70.
  • Walmart Inc.: Wells Fargo maintains its overweight recommendation and reduces the target price from USD 200 to USD 67.
  • Centrica Plc: AlphaValue/Baader Europe upgrades to add from buy with a price target raised from GBX 173 to GBX 175.
  • Virgin Money UK: Peel Hunt downgrades to hold from add with a target price raised from GBX 200 to GBX 218.
  • Brookfield Asset Management Ltd.: JP Morgan upgrades to neutral from rating suspended with a target price of USD 41.