Wall Street rebounds, but the Fed enhances the game

Wall Street is on the rise for the time being on Wednesday, with the S & P 500 up 1.03% to 3,774 points, the Dow Jones 0.82% to 30,613 points and the Nasdaq 1.37% to 10,976 points. Indeed, operators are already “priced” these days due to a series of significant rate hikes from the Fed. Therefore, the outlook for a 75 basis point increase in the federal funds rate tonight is no longer so scary. The market is also aware that US consumption is low this Wednesday, which is not so surprising. The latest “statistics” show a downturn in the U.S. economy, despite the Fed’s just starting a monetary tightening cycle … In today’s Nymex, the barrel of WTI crude fell 1.5% to $ 117. was. One ounce of gold rose 0.5% to $ 1,824. The dollar index fell 0.3% against a basket of currencies. After the recent purge, Bitcoin has been around $ 21,000.

According to the revised data, US retail sales in May 2022 decreased by 0.3% from the previous month, FactSet’s consensus was + 0.2%, and increased by 0.7% in April. Excluding automobiles, retail sales were still up 0.5%, but April consensus was 0.7% and 0.4%. Ultimately, with the exception of cars and petrol, US consumption increased by only 0.1%, compared to a market consensus of 0.5% and 0.8% last month.

The US import price index in May 2022 rose 0.6% from the previous month against a market consensus of 1%. Meanwhile, the Export Price Index rose 2.8% against a 1% consensus FactSet. Over the past year, import prices have risen 11.7% and export prices have risen 18.9%.

The June 2022 Fed’s Empire State Manufacturing Index was minus 1.2 points, and FactSet’s consensus was +5, indicating that activity has diminished.

According to today’s report, US corporate inventories in April 2022 increased 1.2% month-on-month, with market consensus 1.3% and 2.4% last month.

The National Association of Home Builders (NAHB) June 2022 US Housing Market Index was 67, down from 69 a month ago to a consensus of 68.

The Atlanta Fed’s Inflation Expectations Index for June 2022, which measures inflation expectations for the year from a corporate perspective, came online at 3.7% in a previous reading.

Crude oil prices remain in the red after an unexpected increase in US oil reserves was announced last week. Domestic crude oil inventories, excluding strategic stockpiles, increased by 2 million barrels to 418.7 mb in the week ending June 10 according to the US Department of Energy. The consensus expected a reduction limited to 1.3mb. Gasoline inventories decreased by 700,000 barrels (+1 mb consensus) and distilled product inventories decreased by 700,000 barrels (+0.2 mb consensus).

The Fed is expected to raise the federal funds rate tonight by 75 basis points from the current range of 0.75 to 1% to 1.5 to 1.75%. According to CME Group’s FedWatch tool, the probability of such a rate hike is 94.8%. For the July meeting, the FedWatch tool shows a 93.1% probability in the range of 2.25 to 2.5%. This is an additional 75bp rate hike. Sure, the Fed really has no room for manipulation, but inflation in the United States is at its highest level of 8.6% in more than 40 years, with soaring energy prices and soaring food prices.

The Federal Reserve’s financial statement will be released tonight at 8 pm, followed by a press conference by Jerome Powell.

The FedWatch tool shows that after the Fed’s December meeting, the fed funds rate range could be 3.5-3.75% (41.6% probability) or 3.75% -4% (37.7% probability). ..

The European Central Bank’s emergency meeting is just over. The results are not a big surprise, as the financial institution said in a brief press release: “The Board has decided to apply some flexibility to the reinvestment of maturity assets in the PEPP portfolio. The function of the monetary policy transmission mechanism, for the ECB to fulfill its price stability obligations. Prerequisites.’The Eurosystem will be reviewed by the Board in collaboration with ECB staff.’

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Baidu (+ 1%) remains surrounded by Wall Street, but according to Bloomberg and Reuters, Chinese search engines will sell a majority stake in iQiyi as part of an operation to evaluate a video-on-demand platform. We are talking about that for $ 7 billion. Reuters cites two sources familiar with this issue. Baidu holds 53% of iQiyi’s capital in a unit that groups assets that are considered non-strategic.

Warner Bros. Discovery (+ 5%) is aiming to reduce jobs by up to 30% or nearly 1,000 from its global advertising sales team, a person familiar with the matter told Reuters. The company began offering members of its US ad sales team the option to voluntarily leave the company on Tuesday, adding that the global ad sales team has about 3,000 members. The company’s chief financial officer, Gunnar Wiedenfels, reaffirmed its goal of achieving $ 3 billion in savings after Discovery and AT & T’s WarnerMedia merged for $ 43 billion in April. Wall Street questioned the long-term outlook for the streaming industry after the pandemic surge.

Hertz Global shows a 9% rebound on Wall Street. That’s because US car rental companies have just announced a $ 2 billion stock repurchase program with a market capitalization of just over $ 7 billion. This new repurchase plan took place just seven months after the previous plan, which also reached 2 billion and was announced in November 2021. The previous program has not yet repurchased $ 200 million. Therefore, Hertz is currently in a position to acquire $ 2.2 billion, or more than 30% of its capital, prior to its announcement.

Apple (+ 1%). Apple TV + will be the broadcasting platform for the North American football championship, or “soccer.” This is a sport that is gaining momentum across the Atlantic. Therefore, the leading American smartphone giant for video streaming was selected on Tuesday and will broadcast all Major League Soccer (MLS) matches around the world only to Apple TV + Streaming Offer subscribers from 2023 to 10 years. Did. .. The financial terms of the deal haven’t been disclosed, but the Sports Business Journal estimates that the 10-year deal will start in 2023 at $ 250 million per season. Apple hasn’t said how the broadcast of the match will be charged to Apple TV + customers. Apple said $ 4.99 / month subscribers have access to “a wide range of MLS and League Cup matches, including the most important ones,” at no additional cost. The group is also planning paid offers for anyone who wants to watch every match and broadcast.

ExxonMobil (steadily). US President Joe Biden has sent a letter to oil giants, where he mentions refining “much higher than usual” margins, which he considers “unacceptable.” The message is that soaring oil prices have brought a gallon of gasoline (about 3.8 liters) to $ 5 in the United States, reducing household purchasing power in a situation characterized by general inflation. Biden has already attacked oil groups, especially ExxonMobil, recently, and this year he says he “makes more money than God.” Therefore, in a letter to the Executive Director of the Department of Energy, the President of the United States reiterates the need to work in the face of rising oil prices. Biden asks the CEO to explain the record margins during this war and increase production. The President of the United States also wants oil group leaders to make efforts to limit their impact on consumers.

Qualcomm (stable). A European Union court has revoked the € 997 million fine that the European Commission imposed on Qualcomm four years ago for securing an exclusive supply of chips from Apple.

Boeing (+ 5%). According to the European Union Aviation Safety Agency (EASA), US and European civil aviation regulators will meet with Boeing next week on the uncertified 777X.