Morning Minutes

Banking Buyout, The Fed and Earnings In Focus

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Coming off of a strong finish to April, which saw US indices gain 0.7%-0.8%, US index futures are flat this morning. Major European markets and some overseas markets are closed today for May Day, but Shanghai gained 1.1% and Tokyo climbed 0.9% in overseas action. Commodity and currency action is all over the place with WTI Crude Oil down 2.0%, Bitcoin down 2.9%, Silver up 1.4%, Copper up 0.2% and Gold is flat.

The main event this morning is the news that US regulatory authorities have forced troubled First Republic to sell off of its $104B in deposits and $229B in assets to JPMorgan Chase for an undisclosed amount following a weekend auction. This means business as usual for depositors today. While this suggests that the US banking crisis once again being quickly stabilized, it leaves questions as to whether there are other troubled situation out there.

We may hear more about the outlook for the US economy and its financial system when the Fed meets this week with its latest interest rate decision and statement due at 2:00 pm on Wednesday. The US central bank is widely expected to raise the Fed Funds rate by another 0.25%, the question is whether it will hint toward a pause or continued tightening moving forward.

It is a quiet day for earnings reports, but the rest of the week is quite busy with results coming from large caps across a broad range of sectors. US headliners include Dupont, Ford, Starbucks, Marriott, Pfizer, and AMD on Tuesday; Qualcomm and MetLife on Wednesday; Apple and ConocoPhillips on Thursday and Warner Bros Discovery on Friday. Canadian earnings season accelerates this week as well with results due from Thomson Reuters Tuesday; Barrick Gold, Loblaws, Stelco, Canfor and others Wednesday; BCE and Telus on Thursday; and Enbridge plus Magna on Friday.

Countries that are open have been posting monthly PMI reports. China missed on Manufacturing PMI (49.2 vs street 51.4), but beat expectations on Non-Manufacturing PMI (56.4 vs street 50.4). Canadian Manufacturing PMI is due at 9:30 am EDT today (street 50.5 vs previous 48.6). US ISM Manufacturing PMI (street 44.6) is due at 10:00 am EDT along with US Construction Spending (street -0.1%). Manufacturing and Service PMI reports continue through the week along with employment numbers which include US ADP payrolls on Wednesday, and US Nonfarm Payrolls plus Canada jobs on Friday.

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Colin Cieszynski, Chief Market Strategist

Colin Cieszynski, CFA, CMT
Chief Market Strategist
ccieszynski@siawm.com
+1 (647) 282-4428

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