KN Market View 2024-05-19

#KNMarketView

Last week ACWI and SPY recorded new all-time highs of $112.35 and $531.5 after US Inflation increased less than expected, Retail Sales and Building Permits came below market expectations, creating a case in favor of interest rate cuts in September with a probability of 49%.

According to Factset, “219 companies cited the term “inflation” during their earnings calls for the first quarter. This is the lowest number of S&P 500 companies citing “inflation” on earnings calls going back to Q2 2021 (218). It also marks the seventh consecutive quarter in which the number of S&P 500 companies citing the term “inflation” has declined quarter-over-quarter.

At the sector level, the Financials (49) and Industrials (43) sectors have the highest number of companies that cited “inflation” on earnings calls for Q1. However, the Consumer Staples (86%) and Financials (72%) sectors have the highest percentages of companies that cited “inflation” on their Q1 earnings calls during this period” link.

China's economy showed mixed signals, Industrial Production expanded by 6.7% above consensus of 5.5% and Retail Sales came at 2.3% vs 3.8%. China's central bank on Friday said it will set up a new lending program to encourage local governments to "digest" excess housing supply with a $41bn lending program link.

This week many countries will be reporting Purchasing Managers' Index, also worth watching Australia RBA Meeting Minutes, UK, Japan and Canada Inflation Rate, Japan Balance Trade, US FOMC Minutes, UK Retail Sales and US Durable Goods Orders MoM.