This Week’s Watch List [8 Items]
First Republic
The FDIC is hoping to clinch a sale of First Republic Bank before markets open on Monday morning.
Inflation
Two key US inflation gauges showed incremental pressure last week. Personal consumption expenditures price index, excluding food and energy, the Fed’s preferred measure of underlying inflation, rose 0.3% month/month and 4.6% year/year, while the employment cost index for the first three months of 2023 increased +4.8%. In addition, there was 5.5% increase in Commerce Service Price Index.
Monetary Policy
The Federal Reserve is widely expected to raise policy rates (currently 4.75% to 5.00% for fed funds) by 25 bps at the conclusion of this week’s FOMC.
Debt Ceiling
Good news / bad news. The measure passed by the House last week is likely to be DOA (dead on arrival) in the Senate, thus a long drawn-out political battle seems likely, something could rattle equity and fixed income markets.
U.S. Corn
China canceled two previous commitments totaling 22 million bushels last week. We are also watching how cold weather in the corn belt is affecting planting progress.
Commercial Real Estate
Office vacancy rates hit 12.9% in Q1 and office-building prices are down 25% since early 2022, estimates real-estate analytics firm Green Street. Prices of malls are down 19% since early 2022 and down 44% since 2016.
India Bigger Than China
India’s population should reach about 1.429 billion by mid-2023, slightly higher than China’s 1.426 billion. Also % population 25 or younger = 40% of India’s population (UN, Pew Research).
Climate Change Liability
The Supreme Court turned away appeals by oil companies seeking protection from potential liability under state laws for harms caused by climate change.
Numbers of Interest
1.1% Initial estimate of U.S. GDP for 1Q 2023 reported last week, below 1.9% expectations, and compares to 2.6% in 4Q 2022..
84% Probability that the Federal Reserve will raise interest rates by 25bps this week.
12 Number of consecutive months that the Conference Board’s Leading Economic Confidence Index has declined.
12% Represents the nominal gain in McDonald’s same store sale in 1Q 2023, suggesting that consumers are: 1) switching to cheaper out of home food choices; AND 2) tolerating price increases at MCD.
39% Global military spending rose by 3.7% in 2022 to a record $2.24 trillion. Of that, the U.S. spent $877 billion or 39% while Europe spent $345 billion or 15%.
24%, 35%, 39% Quarterly increases in cross border and/or travel and entertainment spending reported by Mastercard, American Express and Visa last week.
$4,175 Median monthly rent price for a New York City (Manhattan) apartment
Upcoming Events
May 1
- USDA Crop Progress report
- USDA Economic Research Service cost of production report; first update since October 2022
May 1 to 3
- Council of Producers and Distributors of Ag-Technology (CPDA) Annual Crop Protection Conference takes place in Louisville, KY. Ken Zuckerberg will be on a panel focused on the future of ag retail
May 3
- Next FOMC meeting; 25 bps rate hike expected
May 3
- Ingredion earnings report and conference call
May 4
- ECB monetary policy decision, expectations call for 25 bps increase to 3.25%, with two additional raises expected in 2023
- International Trade Data and Initial Jobless Claims
Equity, Dollar & Commodity YTD Performance
Source: Barchart
Kenneth Scott Zuckerberg is Lead Industry Analyst, Grains, Farm Supply & Biofuels, CoBank.
