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Officials at the Port of Baltimore opened a fourth, 35-foot deep, temporary channel through the collapsed Francis Scott Key Bridge, allowing cargo ships trapped at the port to exit. 

According to Bloomberg's ship tracking data, four of seven ships trapped at the port navigated the new temporary channel and are sailing down the Chesapeake Bay. 

On Thursday, the Balsa 94, a bulk carrier sailing under a Panama flag, transited the temporary channel for Saint John, Canada. Three other ships, including the Saimaagracht cargo vessel, the Carmen vehicle carrier, and the Phatra Naree bulk carrier, were also able to exit. 

The general cargo ship Balsa 94 becomes the first ship to use the @portofbalt's 35-foot-deep Limited Access Channel promised by the @USACEHQ by the end of April. The ship had been stuck in the harbor since the March 26 collapse of the Key Bridge.

Updated story here:… pic.twitter.com/LZeE9o5rne

The new 35-foot depth channel is a massive increase compared to smaller channels opened several weeks after the Dali container ship slammed into the bridge one month ago, toppling the bridge and paralyzing the port. 

"While this is a significant achievement, we have a long way to go, and Unified Command is committed to fully opening the channel by the end of May," US Coast Guard Cmdr. Baxter Smoak told reporters. 

Next week, salvage crews expect to refloat Dali, which will then be pushed back to port by tugboats for inspection. Once Dali and all debris are removed, the main shipping channel could reopen next month. 

However, Ben Schafer, an engineering professor at Johns Hopkins University, told AP News that a new bridge could take five to seven years to be rebuilt. 

"The lead time on air conditioning equipment right now for a home renovation is like 16 months, right?" Schafer said. 

He continued: "So it's like you're telling me they're going to build a whole bridge in two years? I want it to be true, but I think empirically it doesn't feel right to me."

Let's remember that the bridge was critical for the port and a critical feeder to the Interstate 95 highway network up and down the mid-Atlantic area. Local supply chain snarls will persist for years. 

Egypt is attempting a last ditch effort to reach a ceasefire between Hamas and Israel at a moment IDF shelling of Rafah has intensified, in what are seen as 'softening' operations ahead of an imminent ground offensive, despite international calls to cancel the operation.

The Egyptian government on Friday dispatched a high level delegation to Israel led by top intelligence official Abbas Kamel. The Associated Press reported he is presenting a "new vision" for prolonged ceasefire.

But key to a breakthrough is agreement on the remaining Israeli hostages being released, and the two sides seem no closer to achieving that. The Wall Street Journal cites that "Egyptian officials familiar with the negotiations say the talks toward a hostage deal have little chance of success, but hope to use the meetings to buy time for the U.S. and regional powers to pressure Israel to pause its plans to attack Rafah."

While things heat up in the south of the Strip, the IDF has reportedly allowed many displaced Palestinians to return to their homes in northern Gaza "with minimum restrictions".

According to more via WSJ: "The main stumbling block in the negotiations now is Hamas’s demand that any deal include a credible path to a permanent cease-fire, rather than a temporary pause in the fighting, according to Egyptian and other officials familiar with the negotiations."

As for Egypt, it is bracing for a likely massive refugee influx across its border and into Sinai should an all-out Rafah assault be unleashed. Both Egypt and Israel have been establishing camps; however, these would likely reach and overflow in capacity within 24 hours of a Rafah ground operation.

One top Hamas official told international media correspondents that Hamas is willing to agree to a truce of five years or more with Israel. But Hamas has stuck by its key demand of a full Israeli military withdrawal from the Strip. At the same time Prime Minister Netanyahu has vowed to see through his vow of eradicating Hamas and Palestinian Islamic Jihad (PIJ) terrorists.

Hamas has also said it is willing to lay down its weapons if Israel vows to uphold a two-state solution. Some European countries have also called for this, and have pushed for Palestine to become a full-fledged member of the United Nations.

On Friday at least five more Palestinians have been reported killed by the intensified shelling in Rafah. Currently, more than half of the total Gaza Strip population of 2.3 million are believe to be packed into the southern city. Humanitarian aid organizations are warning of an impending disaster if there is a full military ground offensive. The past weeks have seen dozens killed in similar shelling attacks.

A large segment of the Israeli population believes that Prime Minister Netanyahu is launching into a Rafah operation full-steam for the sake of his political survival. One fresh Haaretz headline, for example reads: "Fearing the End of His Coalition, Netanyahu Edges Toward Rafah Operation Over Hostage Deal".

IMPORTANT — It could take 14 years to clear debris in #Gaza

An estimated 37 million tonnes of debris has been left by #Israel’s war on Gaza’s widely urbanised, densely populated territory.

Source — Pehr Lodhammar, senior officer at the United Nations Mine Action Service… pic.twitter.com/VwpKyPmE8u

Below are some fresh Associated Press headlines detailing the latest developments Friday...

• Ship comes under attack off coast of Yemen as Houthi rebel campaign appears to gain new speed
• Satellite photos show new port construction in Gaza Strip for US-led aid operation
• Some campuses call in police to break up pro-Palestinian demonstrations, while others wait it out
• Chef José Andrés says aid workers killed by Israeli airstrikes represented the ‘best of humanity’
• UN report says 282 million people faced acute hunger in 2023, with the worst famine in Gaza
• EU military officer says a frigate has destroyed a drone launched from Yemen’s Houthi-held areas
• North Gaza still headed toward famine, UN food agency says
• Israel masses military vehicles along Gaza border

Authored by Darlene McCormick Sanchez via The Epoch Times (emphasis ours),

Conservative states across the country—Florida, Iowa, Louisiana, Tennessee, Georgia, and Oklahoma—are taking border security matters into their own hands, proposing or passing legislation targeting illegal immigration.

(Illustration by The Epoch Times, Shutterstock, Getty Images)

The Oklahoma legislature just passed a bill designed to prohibit illegal immigrants from entering or living in the state.

HB 4156 states: “A person commits an impermissible occupation if the person is an alien and willfully and without permission enters and remains in the State of Oklahoma without having first obtained legal authorization to enter the United States.”

The bill passed the state House and Senate by wide margins and Gov. Kevin Stitt, a Republican, is expected to sign it into law.

The legislature declared the issue a crisis in the state and stated in the bill: “Throughout the state, law enforcement comes into daily and increasingly frequent contact with foreign nationals who entered the country illegally or who remain here illegally.

“Often, these persons are involved with organized crime such as drug cartels, they have no regard for Oklahoma’s laws or public safety, and they produce or are involved with fentanyl distribution, sex trafficking, and labor trafficking.”

Under the new law, a conviction related to “impermissible occupation” would be considered a misdemeanor, punishable by up to one year in a county jail, a fine of up to $500, or both.

Subsequent offenses are felonies, punishable by up to two years in prison, a fine of up to $1,000, or both.

Illegal immigrants who are barred from the country or have been issued a removal order by an immigration judge, and then enter Oklahoma will face a felony charge carrying a possible sentence of up to two years in prison, a fine of up to $1,000, or both.

In all instances, those found guilty must leave Oklahoma within 72 hours of being convicted or released from custody.

A prison cell block at the El Reno Federal Correctional Institution in El Reno, Okla., on July 16, 2015. (Saul Loeb/AFP via Getty Images)

The law requires police to collect fingerprints, photographs, and biometric data, which will be cross-checked with Oklahoma State Bureau of Investigation databases.

“The failure of the federal government to address this issue … has turned every state into a border state,” said bill sponsor state Rep. Charles Mr. McCall said in a statement.

“Those who want to work through the process of coming to our country legally are more than welcome to come to Oklahoma; we would love to have them here. We will not reward [illegal immigration] in Oklahoma, and we will protect our state borders.”

U.S. border authorities have apprehended more than 9 million illegal immigrants nationwide under President Joe Biden, according to Customs and Border Protection (CBP) data.

Under the administration’s catch-and-release policy, many have been released into the United States and have taken up residence all over the country.

Texas’ law, Senate Bill 4, makes it a state crime to enter Texas outside legal ports of entry.

The new law was set to go into effect in March, but has been blocked and is currently tied up in the courts.

New Iowa, Tennessee, and Georgia Laws

Earlier this month, Iowa’s Republican Gov. Kim Reynolds signed Senate File 2340 into law.

The new law, which goes into effect July 1, makes it a misdemeanor to be in the state or attempt to enter the state after being deported, denied admission to the United States, or if an individual has an outstanding deportation order.

Being in the state illegally becomes a felony under certain circumstances such as the accused having two or more misdemeanor convictions involving drugs or crimes against a person.

As with the Texas law, it gives judges the discretion to drop the charges if the illegal immigrant agrees to return to the country from which he or she entered the United States.

“Those who come into our country illegally have broken the law, yet Biden refuses to deport them,” Ms. Reynolds stated in a news release.

“This bill gives Iowa law enforcement the power to do what he is unwilling to do: enforce immigration laws already on the books.”

Tennessee Gov. Bill Lee signed a new law this month that requires law enforcement agencies to communicate with federal immigration authorities if they discover people are in the country illegally, requiring in most cases cooperation in the process of identifying, catching, detaining, and deporting them.

Texas Gov. Greg Abbott holds a press conference at Shelby Park in Eagle Pass, Texas, on Feb. 4, 2024. (Sergio Flores/AFP via Getty Images)

The law takes effect July 1.

“When there is an interaction with law enforcement, it’s important that the appropriate authorities are notified of the status of that individual,” Mr. Lee, a Republican, told reporters after signing the bill into law. “I think that makes sense. So, I’m in support of that legislation.”

Members of the Tennessee House blamed President Biden’s lack of border enforcement for the necessity of the law.

“President Biden’s administration has delivered this pain to our doorsteps,” Tennessee state Rep. Chris Todd said on the House floor.

In Georgia, lawmakers passed House Bill 1105 that would require jailers to check the immigration status of inmates.

The bill is part of an ongoing political response to the February slaying of nursing student Laken Riley on the University of Georgia campus, allegedly by an illegal immigrant from Venezuela.

The man, Jose Antonio Ibarra, was arrested in February on murder and assault charges in the death of the 22-year-old.

Immigration officials say Mr. Ibarra, 26, crossed into the United States illegally in 2022. The Department of Homeland Security confirmed to Sen. Lindsey Graham(R-S.C.)  that Mr. Ibarra was paroled into the country illegally due to “capacity problems” at border detention facilities

The Georgia bill was sent to Republican Gov. Brian Kemp’s desk on April 3 and awaits his signature, at which time most measures would take effect immediately.

Louisiana, Arizona, New Hampshire

Texas’ neighbor, Louisiana, is considering the passage of SB 388, a GOP-led bill that would allow state police to arrest suspected illegal immigrants within the state.

The law passed the chamber on April 8 along party lines and headed to the House, also controlled by Republicans.

“Louisiana is one step closer to securing our border and addressing our illegal immigration crisis,” Republican state Sen. Valarie Hodges, the bill’s sponsor, posted on X.

A National Guard soldier looks across the Rio Grande to Mexico on the border in Eagle Pass, Texas, on May 23, 2022. (Allison Dinner/AFP via Getty Images)

The battleground state of Arizona passed a law similar to Texas’ HB 4, but its Democratic Gov. Katy Hobbs vetoed it.

That inspired the Legislature to draft a ballot measure to be put to voters in November that would require businesses to use E-verify. E-verify is a voluntary federal online service for employers to check an employee’s eligibility to work in the United States against Department of Homeland Security and Social Security records.

New Hampshire, which is Republican-led, passed SB 504 allowing police to bring criminal trespassing charges against people suspected of illegally entering the United States from Canada. The measure must be approved by the House to advance.

Cities and Counties

Cities and counties in red and blue states are also pushing back in creative ways to stop illegal immigrants from coming into their jurisdictions.

“They’re basically dumped on their doorstep,” said Jessica Vaughan, director of policy studies at the Center for Immigration Studies, a “pro-immigrant, low-immigration” think tank.

In June 2023, New York City under Democratic Mayor Eric Adams sued more than 30 New York local governments alleging they issued unlawful executive orders prohibiting temporary housing for illegal immigrants in their jurisdictions.

Counties such as Orange and Rockland in upstate New York were successful in using local zoning laws to stop the mayor from busing illegal immigrants to live in their hotels.

The state Supreme Court granted Rockland a temporary restraining order against the mayor’s plan after the county argued that local zoning laws bar hotels from operating as shelters.

Orange County was granted a similar ruling.

Likewise, zoning was used by the city of Taunton, Massachusetts, to stop illegal immigrants from living in hotels, Ms. Vaughan said.

In May 2023, the state was paying millions of dollars to house some 120 homeless and migrant families at a local hotel long-term.

A bus carrying illegal immigrants from Texas arrives at Port Authority Bus Terminal in New York City on Aug. 10, 2022.

Taunton city leaders filed a lawsuit against the hotel, claiming it violated its occupancy limit for nearly four months. The city aims to collect $114,600 in fines.

Residents in these small communities often struggle with housing and obtaining services that illegal immigrants get for free, Ms. Vaughan noted.

“Now paying taxes, essentially, to support these illegal migrants in their town. The schools have to accommodate them. And that’s a huge cost on the local taxpayers,” she said.

In Colorado’s Mesa County, commissioners passed a resolution in February declaring the county a “non-sanctuary county,” and denying shelter and services to illegal aliens sent there by the state or federal government, she said.

Commissioners also passed a resolution to send a letter to Denver Mayor Mike Johnston informing him the county doesn’t plan to help the city deal with its illegal immigrant surge.

Ms. Vaughan said that she believes other states are waiting to see what happens with some of Texas’ laws, such as SB 4, which are aimed at deterring illegal immigration.

“I think the feeling among most state and local officials that I’ve talked to about it is that they are watching and waiting and hoping that the court will draw some boundaries for them on what they can and cannot do,” she said.

Florida’s Laws

When it comes to making life more difficult for illegal immigrants through legislation, Florida has proven as aggressive as Texas.

Besides beefing up law enforcement to help the U.S. Coast Guard spot migrants and sending the Florida National Guard to Texas, Florida Gov. Ron DeSantis has approved laws to deter illegal aliens from staying in the Sunshine State.

The Republican governor signed SB 1718 in 2023, which was criticized by the left as one of the most anti-illegal immigrant pieces of legislation in the country.

Read more here...

Authored by Simon White, Bloomberg macro strategist,

Gold trading in China has exploded and stocks of copper have risen sharply prompting speculation that policymakers are on the brink of a yuan devaluation. Even though it’s still a tail-risk, it’s one requiring greater vigilance as the economy becomes increasingly deflationary, redoubling capital outflow pressures.

The yuan has been steadily falling versus the dollar this year. So far the decline has been measured, but activity in commodities has prompted conjecture that China is about to orchestrate a significant one-off yuan devaluation. Futures gold trading in China has moved sharply higher, and the net long position has been rising.

Also, there has been a sharp rise in China’s copper stocks. Copper as well as other commodities is used as a source of collateral in China.

USD/CNY has been bumping up against the upper band of the PBOC’s fix for the currency pair.

China has a nominally closed capital account, but it is de facto leaky. Capital outflow is rising, and this puts further pressure on the economy as it has a geared negative effect on domestic liquidity.

Allowing the yuan to depreciate against the dollar (it is appreciating against most other currencies) takes some of the pressure off.

China, though, has been unofficially intervening, via the state banks, to stabilize the yuan’s fall.

Nonetheless, it is still less likely than not they will countenance a significant devaluation of the yuan versus the dollar.

• First, it would compromise the financial stability that China has sought to obtain.

• Second, it risks a tariff backlash from the US.

• Third it may be counter-productive if it looks panicky and prompts even more capital outflow.

The stockpiling could well be for other reasons.

• Rising global inflation risks (there is more to come, and even China will likely soon face consumer inflation);

• reserve diversification in a more multi-polar world;

• and raw materials for solar (AI needs a lot of energy) and EVs, and so on.

• China planning for an invasion of Taiwan is another tail-risk that can’t be completely discounted.

Falling bond yields, though, show China is nearing a crunch point (read why here) and will need to do something soon to avert a debt deflation.

Even though a full-scale devaluation is less likely, it’s a non-negligible risk that can’t be ignored.

Short-term inflation expectations rose... again... according to the latest UMich sentiment survey with 1-year expectations at 3.2% final, up from preliminary 3.1% for April, and 2.9% for March. This is the highest level since Nov 2023...

Source: Bloomberg

The headline sentiment also declined in April from three-year-highs. Consumers’ perceptions of their current financial situation and the economic outlook over the next year both slid to four-month lows. The current conditions gauge dropped to 79 from 82.5. A measure of expectations fell to 76 from 77.4.

Source: Bloomberg

While “consumers’ frustration over high prices in their day-to-day spending decisions grew this month, price concerns for large purchases - durable goods, vehicles, and homes - were all little changed from last month,’’ Joanne Hsu, director of the survey, said in a statement.

About 38% of consumers reported that high prices were weighing down their living standards, up from 33% who said so last month.

Sentiment gauges also provide insight into voters’ feelings about the economy and their finances leading up to the presidential election in November. President Joe Biden’s recent polling bump in key battleground states has mostly evaporated amid economic pessimism, the latest Bloomberg News/Morning Consult poll found.

“Consumers continue to express uncertainty about the future trajectory of the economy pending the outcomes of the upcoming election,” Hsu said.

Partisan differences in views of the economy remain pronounced. While Democrats and Independents saw little change in sentiment this month, sentiment for Republicans fell about 6 index points.

Republicans reported declines for four of the five components of the sentiment index, reflecting their deteriorating views across multiple facets of the economy. Despite these declines, sentiment for Republicans remains well above 2022 and 2023 levels.

In fact, the current reading for Republicans’ Expectations Index is the second highest (after last month) since the end of 2020, as the Trump presidency came to a close.

The world's largest global diversified miner, BHP, is being forced to significantly raise its buyout offer of Anglo American or walk away from the proposed all-share deal valued at £31.1 billion ($38.9 billion). 

"The BHP proposal is opportunistic and fails to value Anglo American's prospects, while significantly diluting the relative value upside participation of Anglo American's shareholders relative to BHP's shareholders," Anglo chairman Stuart Chambers wrote in a statement on Friday. 

Chambers continued, "The proposed structure is also highly unattractive, creating substantial uncertainty and execution risk borne almost entirely by Anglo American, its shareholders and its other stakeholders."

The first indication that Anglo executives would reject the deal came Thursday afternoon when Reuters reported two sources familiar with talks with top Anglo investors who said the offer was 'unattractive.' 

Anglo owns massive copper mines in South America. The miner has become an acquisition target of BHP solely to create the world's largest copper mining giant, with control of about 10% of the global copper mining supply. Copper mining supplies are dwindling, and demand is expected to soar as power grids worldwide are upgraded to support the green energy transition. 

The Financial Review quoted hedge fund manager Rafi Lamm of Melbourne's L1 Capital as saying BHP would have to increase its bid for Anglo's assets, which have been underappreciated by the market and make strategic sense for BHP. 

"We think it's a sensible move by BHP and we think they can afford to pay the proposed deal pricing and a lot more," Lamm said. 

James Whiteside, head of mining and metals corporate research at consultancy Wood Mackenzie, said BHP will have to raise its offer to bring its value "closer to the share price in 2023 before operational issues emerged." 

On Thursday, BHP proposed an all-share deal valued at £31.1 billion ($38.9 billion). The transaction depends on Anglo spinning off its South African iron ore and platinum businesses to its shareholders. The offer is conditional and non-binding at £25.08 a share, or about a 14% premium to Anglo's closing share price on Wednesday.

BHP investor Equity Trustees Asset Management told the Sydney Morning Herald that BHP's bid to buy Anglo American made sense strategically, "but much will depend on what BHP will eventually pay." 

"Having a bit more copper in the portfolio is a positive. If copper can move up from here this will likely offset any errors made in its purchase price of Anglo," Equity Trustees head of equities Chris Haynes said.

Haynes added, "As we know, large acquisitions like this always have problems and will likely weigh on the BHP stock price in the short term."

Shares in BHP fell on Friday, ending the Australian session at 4.6% lower.

Meanwhile, copper prices hit $10,000 a ton for the first time in two years, fueled by speculation of dwindling supplies and robust demand from the green energy transition. 

Copper bulls like BlackRock and Trafigura Group have said the base metal must move higher to spur new mine development. 

BofA recently warned, "The copper supply crisis is here." 

Let's not forget our note titled "The Next AI Trade," which explains the investment opportunities in upgrading America's grid as generative AI data centers increase power demand. 

And Jefferies is on it: "Copper Demand in Data Centers." 

Recall billionaire mining investor Robert Friedland, who explained last year on Bloomberg TV that "copper prices might explode ten times." 

In a rollercoaster 48 hours to close the week, yesterday's early market slump (after the disappointing Meta guidance) has been fully reversed and stock futures are now pointing sharply higher after blockbuster earnings from Microsoft and Alphabet with attention now turning to the release of US personal consumption data - the Fed’s preferred measure of inflation, where a hotter-than-expected reading after Thursday’s weaker GDP figures may signal US rates will remain higher for longer. As of 7:40am, S&P futures are 0.7% higher while Nasdaq futures gain 1.1%. The positive sentiment carried into European trading, with tech stocks leading equity gains, with miners outperforming as copper hit $10,000 a ton for the first time in two years. Traders are also speculating as to whether Japan will intervene to support the Yen after the currency slid to a 34-year low before rebounding after the central bank kept rates on hold and Ueda said nothing to prop up the currency in what Deutsche Bank has called a policy of "benign neglect." Later in the day, attention will shift. Elsewhere, the USD is higher and bond yields are slightly lower. In commodities, oil and precious metals are higher; base metals and Ags are mixed. Today, key focus will be the March PCE release at 8.30am ET, where consensus expects headline PCE and core PCE to both rise +0.3% MoM.

In premarket trading, Google parent Alphabet surged as much as 12%, poised to add more than $230 billion to its market capitalization and exceed $2 trillion in valuation. Microsoft rose 4% after the software giant reported third-quarter results that beat expectations, a sign that AI is fueling growth and demand. The companies trounced Wall Street estimates with their latest quarterly results, fueled in part by demand for AI services.  In other earnings-related moves, Exxon fell 1.2% after missing EPS but smashing revenue estimates, while Intel slumped more than 7% after providing weaker-than-anticipated guidance. Here are some other notable movers:

• Atlassian shares slide 5.3% after the application software company said co-founder Scott Farquhar is stepping down as co-CEO after 23 years.
• Boyd Gaming shares fall 14% after the regional casino operator reported adjusted earnings per share for the first quarter that missed the average analyst estimate.
• Chinese stocks listed in the US rise, reflecting a rally in Hong Kong as Asian big tech names get a boost following robust earnings from Alphabet and Microsoft. Alibaba +2.0%, Baidu +2.6%, PDD Holdings +2.5%, JD.com +5.0%, NetEase +1.7%, Trip.com +3.1%, KE Holdings +3.3%, Bilibili +5.4%
• Cloud software stocks rise following better-than-expected sales in Microsoft and Google’s cloud divisions. Datadog +4.9%, Snowflake +3.5%, MongoDB +3.8%, Cloudflare +2.3%
• Enphase Energy (ENPH US) shares rise 2.9% as Barclays upgrades its recommendation to overweight from equal-weight, saying the solar-equipment manufacturer is nearing an inflection point.
• Intel shares drop 7.3% after the chipmaker’s second-quarter outlook was weaker than anticipated, underlining the difficulties the company has had in executing a turnaround.
• KLA Corp shares rise TKTK after the semiconductor equipment supplier’s third-quarter earnings beat estimates and outlook for the fourth quarter was strong, prompting analysts to raise their price targets.
• Marathon Digital shares rise 3.3% after the company increases year-end hash rate target to 50 EH/s from 35-37 EH/s.
• Mobileye shares fall 3.0% after a downgrade to underweight at Morgan Stanley in the wake of the company’s results.
• Roku shares fall 4.8% as the streaming-video platform company said it expects adjusted Ebitda to moderate in the second half of the year, after reporting first-quarter results that beat expectations.
• Snap shares surge 24% after the social-media company reported first-quarter results that beat expectations and gave an outlook that is stronger than forecast, helping to ease concerns about its growth.
• T-Mobile shares waver after the carrier’s results received a mixed reception from analysts, who said that the earnings were overall solid, but were disappointed that the company didn’t raise its guidance for postpaid phone subscribers as it looks raise prices.
• Teladoc Health shares drop 4.4% after a second-quarter forecast missed estimates. The healthcare services company also reported a first-quarter gross margin that fell short of expectations.

While earnings remain center stage, the focus Friday will also be on US data, with the Fed's preferred measure of inflation of particular interest. Treasury yields dipped following yesterday’s bond-market losses when stagflationary GDP data pushed back expectations for policy easing. A gauge of the dollar was steady.

“We have a precarious situation where the earnings of a few big companies are driving sentiment on the entire market,” said Justin Onuekwusi, chief investment officer St James Place Management. “We have seen a bit of volatility driven by earnings as well as rate decreases being priced out and that’s likely to continue.”

Almost 80% of S&P 500 firms that have reported so far have beaten analysts’ earnings estimates, according to JPMorgan strategists. Still, stock price reactions have been underwhelming, with better-than-expected results seeing below average upside, while those missing estimates are being penalized by more than usual, the strategists wrote. More than 50% of S&P 500 companies have yet to report.

A big highliight of the overnight session was the latest collapse in the Japanese yen which fell to a fresh cycle low near 157 versus the dollar after the Bank of Japan stood pat on interest rates and Governor Ueda did little to push back against recent weakness in the press conference. The yen’s slump to a record low versus the dollar has left traders on guard for any hints of intervention from Japan. The yen swung sharply from the day’s low to near its high amid jittery trading in the wake of the Bank of Japan’s decision to keep monetary policy unchanged.

“Should the yen fall further from here, like after the BOJ decision in September 2022, the possibility of intervention will increase,” said Hirofumi Suzuki, chief currency strategist at Sumitomo Mitsui Banking Corp. “It is not the level but it’s the speed that will trigger the action.”

European stocks rose along with US equity futures: the Stoxx 600 is up 0.6%, with technology and construction sectors leading gains, while chemicals and insurance subgroups are the biggest losers. Thyssenkrupp shares jumped after Czech billionaire Daniel Kretinsky’s EP Corporate Group agreed to buy a fifth of the German manufacturer’s troubled steel unit. Miners outperformed as copper hit $10,000 a ton for the first time in two years. Here are the biggest movers Friday:

• Saint-Gobain shares gain as much as 6.3% after the French building-materials producer reported first-quarter sales that were slightly above expectations, according to Oddo. Separately, management is seeing signs of bottoming out for new build markets in Europe
• NatWest rises as much as 5.2% after net interest income and pretax operating profit for the first quarter beat the average analyst estimate
• Amundi soars 7%, most in two years, after the French asset manager reported net inflows for the first quarter that beat the average estimate. Citi analysts expect mid-single digit consensus upgrades. KBW called the results “solid.”
• Electrolux shares gain as much as 7%, the most since December, after first-quarter figures from the Swedish maker of domestic appliances weren’t as bad as feared, with an operating loss of SEK720 million, versus an expected SEK809 million
• Jeronimo Martins soars most in six months after Ebitda margin erosion in 1Q was smaller than analysts expected, showing that Portuguese retailer can withstand competition pressure in Poland as well as negative impact from slowing inflation
• Airbus shares fall as much as 3% to the lowest since early March after its first-quarter results were significantly below estimates, even as the planemaker reiterated its full-year targets
• IMCD’s shares sink as much as 10%, the most since March 2020, after the specialty chemicals and ingredients company reported first-quarter operating Ebita that missed estimates. ING says the story was “underlying quite weak.”
• Hexagon shares fall as much as 4.4% after the software firm reported sales and operating profit that missed estimates, while saying that demand will remain mixed in the near term
• ConvaTec Group shares decline as much as 7.2% after the medical equipment maker was downgraded to reduce by analysts at Peel Hunt, which has growing concerns about its wound care products in the US
• Yara shares fall as much as 6.9%, the lowest intraday since May 2020, after the Norwegian agricultural chemicals firm reported adjusted Ebitda below estimates

Earlier in the session, Asian stocks rose, headed for their best week since November, as investors cheered upbeat earnings from technology firms and sentiment on China continued to improve. Japanese stocks rose as the Bank of Japan left interest rates unchanged. The MSCI Asia Pacific Index rose 0.8%, with TSMC and Tencent among the biggest boosts. The gauge extended its weekly gains to more than 3%. Stocks rose in mainland China and Hong Kong, with the Hang Seng China Enterprises Index poised for its best week since April 2015. Signs of an improving Chinese economy, better corporate earnings and Bejing’s support measures have spurred inflows from global funds.

• Hang Seng and Shanghai Comp. were underpinned by strength in tech and property, while the constructive mood was also facilitated by a meeting between US Secretary of State Blinken and Chinese Foreign Minister Wang where it was stated that the US-China relationship has stabilised although negative factors are building.
• ASX 200 underperformed after the prior day's losses caught up with the index on return from holiday.
• Nikkei 225 was initially choppy and briefly dipped into negative territory as participants braced for the BoJ policy announcement and whether the central bank flags a reduction in bond buying, but then surged as the central bank kept policy settings unchanged and refrained from any major hawkish surprises.

In FX, the dollar was slightly lower, as all the action was in the Japanese yen which cratered to a fresh 34 year low near 157 versus the dollar after the Bank of Japan stood pat on interest rates and Governor Ueda did little to push back against recent weakness in the press conference. USD/JPY did swing sharply lower to sub-155 before swiftly rebounding in jittery trading amid heightened speculation that authorities may intervene in the market.

In rates, treasuries climbed, paring some of Thursday’s post-data drop. US yields are richer by up to 2bp across long-end of the curve with 5s30s spread around 8bp, tighter by around 1bp on the day; 10-year yields around 4.685%, down 1.5bp on the day with bunds outperforming by 1bp in the sector.

In commodities, oil prices advance, with WTI rising 0.4% to trade near $83.90 a barrel. Spot gold rises 0.7% to around $2,350/oz. Copper hit $10,000 a ton for the first time in two years.

Looking at today's calendar, the US session highlight is the March personal income/spending (8:30am); we algo get the April revised University of Michigan sentiment (10am) and April Kansas City Fed services activity (11am). Fed members are in self-imposed quiet period ahead of May 1 policy announcement

Market Snapshot

• S&P 500 futures up 0.8% to 5,121.00
• STOXX Europe 600 up 0.6% to 505.47
• MXAP up 0.7% to 172.65
• MXAPJ up 0.8% to 536.04
• Nikkei up 0.8% to 37,934.76
• Topix up 0.9% to 2,686.48
• Hang Seng Index up 2.1% to 17,651.15
• Shanghai Composite up 1.2% to 3,088.64
• Sensex down 0.7% to 73,833.99
• Australia S&P/ASX 200 down 1.4% to 7,575.91
• Kospi up 1.1% to 2,656.33
• German 10Y yield little changed at 2.60%
• Euro up 0.2% to $1.0748
• Brent Futures up 0.2% to $89.21/bbl
• Brent Futures up 0.2% to $89.21/bbl
• Gold spot up 0.6% to $2,347.56
• US Dollar Index down 0.10% to 105.49

Top Overnight News

• BOJ leaves rates unchanged, as expected, and retained its guidance from Mar about purchasing gov’t bonds (there had been some speculation of a taper or a hint of one). WSJ
• Japan’s Tokyo CPI for April cools far more than anticipated, coming in +1.8% ex-food/energy vs. the Street +2.7% and down from +2.9% in March. BBG
• China’s foreign minister says the relationship w/the US was starting to stabilize but that “negative factors” were increasing. NBC News
• Eurozone inflation expectations over the next 12 months ticked down to 3% (from 3.1%), hitting the lowest level since Dec 2021. ECB
• The ECB is likely to need extra interest rate cuts if global borrowing costs are pushed up by the US Federal Reserve maintaining its restrictive monetary policy stance, a top eurozone policymaker has said. Fabio Panetta, head of Italy’s central bank, said that if the Fed keeps rates on hold longer than markets expect, or even raises them, it would be “likely to reinforce the case for a rate cut [by the ECB] rather than weakening it”. FT
• Donald Trump’s allies are quietly drafting proposals that would attempt to erode the Federal Reserve’s independence if the former president wins a second term, in the midst of a deepening divide among his advisers over how aggressively to challenge the central bank’s authority. WSJ
• Walmart's CEO says inflation continues to cool: “At Walmart, we are now seeing prices that are in line with where they were 12 months ago. I haven’t been able to say that for a few years now. The last few weeks, we've taken even more prices down in areas like produce and meat and fresh food”. ABC News
• Annualized US core PCE inflation accelerated to 4.5% over the last three months, but underlying trends are less alarming. The Q1 acceleration mostly reflected one-off surprises in acyclical categories where costs pass-through with long lags, and forward-looking indicators are at target-consistent levels. Progress therefore appears delayed but not reversed, and we forecast that core PCE inflation will slow to 2.2% on a sequential annualized basis in 2024Q2-Q4. GIR
• Microsoft and Alphabet jumped premarket after stellar earnings and expectations for a surge in cloud revenue fueled by AI demand. Execs at both companies said they plan to spend more on AI. BBG

Earnings

• Alphabet Inc (GOOGL) Q1 2024 (USD): EPS 1.89 (exp. 1.51), Revenue 80.54bln (exp. 78.59bln); board authorised Co. to repurchase up to an additional 70bln and declared a cash dividend of 0.20/shr. Shares +11.5% in pre-market trade
• Microsoft Corp (MSFT) Q3 2024 (USD): EPS 2.94 (exp. 2.82), Revenue 61.86bln (exp. 60.8bln). Shares +4.1% in pre-market trade
• Intel Corp (INTC) Q1 2024 (USD): Adj. EPS 0.18 (exp. 0.14), Revenue 12.70bln (exp. 12.78bln). Shares -7.5% in pre-market trade
• Snap Inc (SNAP) Q1 2024 (USD): Adj. EPS 0.03 (exp. -0.05), Revenue 1.19bln (exp. 1.12bln). Shares +23.5% in pre-market trade
• TotalEnergies (TTE FP) Q1 (USD): Adj. Net 5.11bln (exp. 5bln). Adj. EBITDA 11.5bln (exp. 11.1bln). Plans a USD 2bln share buyback Q2; Cash flow from operating activities 2.2bln (prev. 5.1bln Y/Y); Dividend +7% Y/Y
• Airbus (AIR FP) Q1 24 (USD): Adj. EBIT 600mln (exp. 789mln), Revenue 12.80bln (exp. 12.87bln), Gross Orders 170 (prev. 156), Net Orders 170 (prev. 142), Deliveries 142. Reaffirms 2024 guidance.

A recap of overnight news courtesy of Newsquawk

APAC stocks were mostly higher as the region digested recent market themes including disappointing US data, strong big tech earnings and the BoJ policy announcement. ASX 200 underperformed after the prior day's losses caught up with the index on return from holiday. Nikkei 225 was initially choppy and briefly dipped into negative territory as participants braced for the BoJ policy announcement and whether the central bank flags a reduction in bond buying, but then surged as the central bank kept policy settings unchanged and refrained from any major hawkish surprises. Hang Seng and Shanghai Comp. were underpinned by strength in tech and property, while the constructive mood was also facilitated by a meeting between US Secretary of State Blinken and Chinese Foreign Minister Wang where it was stated that the US-China relationship has stabilised although negative factors are building.

Top Asian News

• Chinese Foreign Minister Wang said in a meeting with US Secretary of State Blinken that the China-US relationship has stabilised but negative factors are building, while he added that sliding into conflict with the US would be a lose-lose situation that they ask the US not to interfere with China's internal affairs. Furthermore, Blinken said there is no substitute for face-to-face diplomacy and they need to avoid miscalculations, while he hopes the US and China can make progress on agreements, citing fentanyl, military-to-military ties and AI risks.
• US is pushing allies in Europe and Asia to tighten restrictions on exports of chip-related technology and tools to China amid rising concerns about Huawei's development of advanced semiconductors, according to FT sources. US wants Japan, South Korea, and the Netherlands to use existing export controls more aggressively, including stopping engineers from their countries servicing chipmaking tools at fabs in China.
• ByteDance reportedly prefers shutting down the app rather than a sale if it exhausts all legal options and the algorithms TikTok relies on are deemed core to ByteDance’s overall operations, making the sale of the app unlikely, according to Reuters sources.

European bourses, Stoxx 600 (+0.5%) are entirely in the green, though trade has been contained at session highs, as participants await March's US PCE at 13:30 BST. European sectors are almost entirely in the green, with the exception of Chemicals, following poor IMCD (-9.1%) results. Tech tops the pile, with optimism lifted following strong large-cap Tech earnings in the US. US Equity Futures (ES +0.7%, NQ +0.9%, RTY +0.1%) are entirely in the green, with the NQ outperforming, benefitting from significant pre-market strength in both Google (+11.1%) and Microsoft (+3.6%), after reporting strong earnings after-market.

Top European News

• ECB's Panetta said they must weigh the risk of monetary policy becoming too tight, while he added that timely and small rate cuts would counter weak demand and could be paused. Furthermore, he stated that hesitations in adjusting rates would hurt investment and productivity, while large rate cuts could create a credibility issue.
• ECB Consumer Inflation Expectations survey (Mar) - 12-months ahead 3.0% (prev. 3.1%); 3-year ahead 2.5% (prev. 2.5%). Economic growth expectations for the next 12 months 1.1% (prev. -1.1%)
• SNB Chair Jordan said SNB has been successful in fight against inflation; uncertainty remains elevated and shocks can occur at and time

BOJ

• BoJ kept its policy settings unchanged with the short-term interest rate target at 0.0%-0.1%, as expected, with the decision made unanimously, while it dropped the reference from the statement that it currently buys about JPY 6tln worth of JGBs per month but stated that it will conduct JGB, commercial paper and corporate bond buying in line with the decision in March. BoJ said it must be vigilant to FX and market moves and their impact on the economy and prices but noted no excessive behaviour is seen in Japan's asset market and financial institutions' practices. Furthermore, it stated that if trend inflation rises, the BoJ will likely adjust the degree of monetary easing but also added to expect accommodative monetary conditions to continue for the time being. In terms of the latest Outlook Report, Board Members' Real GDP median forecast for Fiscal 2024 was cut to 0.8% from 1.2% but the Fiscal 2025 median forecast was maintained at 1.0%, while the Core CPI Fiscal 2024 median forecast was raised to 2.8% from 2.4% and Fiscal 2025 median forecast was raised to 1.9% from 1.8%.
• PRESS CONFERENCE: BoJ Governor Ueda said easy financial conditions will be maintained for the time being; Weak JPY so far is not having a big impact on trend inflation. Difficult to gauge timing of future rate hikes. Weak JPY so far is not having a big impact on trend inflation. Reduction in JGB buying in the future is in sight. Will not comment on FX moves

FX

• USD is around flat, and holding within a 105.40-71 range. USD was initially being propped up by JPY softness post-BoJ, although that has abated somewhat, amid Yen intervention speculation.
• JPY is the clear laggard across the majors following the BoJ policy announcement overnight, which provided no hawkish surprise. USD/JPY took another leg higher amid BoJ Ueda's press conference, before being slapped down to sub-155 levels, a few hours later. Some will likely view the move as intervention but we are yet to see any official confirmation of this.
• EUR is flat vs. the USD and breached yesterday's 1.0740 best. If the pair ventures higher, 1.0756 from April 11th is the next potential target.
• Antipodeans are firmer vs. the USD and outmuscling peers alongside the favourable risk environment. AUD/USD has gained a firmer footing above its 200 and 50DMAs at 0.6526 and 0.6532 respectively with focus now on a potential approach of 0.66
• PBoC set USD/CNY mid-point at 7.1056 vs exp. 7.2449 (prev. 7.1058).

Fixed Income

• USTs are a touch firmer after yesterday's data induced losses, which sent the Jun'24 UST to a contract low of 107.04. Today's trade has been contained within a 107.04-108.01 range, with all eyes on March's US PCE metrics later.
• Bund price action has been following USTs and attempting to recoup recently lost ground which has been inspired this week by a combination of better data and speak from hawkish ECB members. Bunds are so far respecting yesterday's 129.53-130.38 range.
• Gilts are firmer and in-fitting with global peers in an attempt to claw back recent losses. However, with a lack of UK-specific drivers, UK paper will likely remain at the whim of global peers.

Commodities

• A relatively tame session thus far for the crude complex following Thursday's choppy trade, as participants await monthly US PCE metrics; Brent Jun'24 range between 89.08-69/bbl.
• Precious metals are firmer amid the softer Dollar and ahead of the US PCE data, with spot silver narrowly leading vs spot gold. XAU topped yesterday's peak (USD 2,344.93/oz) to trade in a current intraday range between USD 2,326.36-2,352.30/oz.
• Base metals are stronger across the board amid bullish momentum after copper crossed key levels, with the broader complex underpinned by the softer Dollar and broader risk appetite; 3M LME copper is posting gains of over USD 100/t at the time of writing after mounting the key USD 10,000/t mark to levels last seen in 2022.
• India Oil Minister said cartel of oil producers are responsible for current volatility in the market; oil producers are cutting down and holding back production, according to ETNow.

Geopolitics: Middle East

• "US Secretary of State Blinken to visit Israel on Tuesday", according to Sky News Arabia
• Hezbollah said it shelled an Israeli force with artillery at the site of Al-Malikiyah and achieved a direct hit, according to Al Jazeera.

Geopolitics: Other

• US official said the US could announce as soon as Friday USD 6bln in new weapon purchases for Ukraine.
• North Korean leader Kim supervised the test-firing of multiple launch rockets, according to KCNA.
• China's Defence Ministry said Chinese and French militaries established a dialogue mechanism for cooperation between theatre commands, according to Reuters.

US Event Calendar

• 08:30: March PCE Deflator MoM, est. 0.3%, prior 0.3%
  • March PCE Core Deflator MoM, est. 0.3%, prior 0.3%
  • March PCE Deflator YoY, est. 2.6%, prior 2.5%
  • March PCE Core Deflator YoY, est. 2.7%, prior 2.8%
• 08:30: March Personal Income, est. 0.5%, prior 0.3%
  • March Personal Spending, est. 0.6%, prior 0.8%
  • March Real Personal Spending, est. 0.3%, prior 0.4%
• 10:00: April U. of Mich. Sentiment, est. 77.9, prior 77.9
  • April U. of Mich. Current Conditions, prior 79.3
  • April U. of Mich. Expectations, prior 77.0
  • April U. of Mich. 1 Yr Inflation, prior 3.1%
  • April U. of Mich. 5-10 Yr Inflation, est. 3.0%, prior 3.0%
• 11:00: April Kansas City Fed Services Activ, prior 7

DB's Jim Reid concludes the overnight wrap

It’s been a volatile 24 hours in markets, but in spite of a selloff yesterday, there’s increasing positivity this morning thanks to strong results from Microsoft and Alphabet after last night’s close. Both companies exceeded revenue and earnings expectations, with Alphabet seeing the larger beat on profitability, as their growth was boosted by demand for cloud computing and AI-related offerings. That’s seen Alphabet rise by over 11% in after-hours trading, while Microsoft is up more than -4%, having both been down in the main session yesterday. In turn, futures on the S&P 500 are currently up +0.81%, which is a significant turnaround from yesterday, as the index closed -0.46% lower, and that was only after recovering from initial losses that had pushed it down -1.60%.

That positivity has continued into Asian markets overnight, which comes as the Bank of Japan left their interest rates unchanged at their latest meeting. That’s seen the Japanese Yen weaken further, and it’s currently trading at 156.11 per dollar, which is its weakest level since 1990. Front-end government bond yields have also fallen overnight in Japan, with the 2yr yield down -0.7bps to 0.29%. And for equities, all the major indices have risen, including the Nikkei (+0.74%), the KOSPI (+1.10%), the Hang Seng (+1.98%), the CSI 300 (+1.03%) and the Shanghai Comp (+0.79%).

Before that overnight reversal, markets had struggled yesterday, as challenging data and poor earnings led to a notable selloff. That meant investors pushed back the timing of rate cuts yet again, and the 2yr Treasury yield (+7.1bps) closed at 4.998%, so almost at 5% for the first time since mid-November. That was mainly driven by the Q1 US GDP release, which had the unfortunate combination of a downside surprise on growth, and an upside surprise on inflation. As we found out in 2022, that stagflationary mix can potentially be a bad recipe for markets, so it wasn’t a surprise to see equities and bonds lose ground simultaneously even if equities have since been busy making up their initial losses.

In terms of the details, growth came in at an annualised rate of +1.6% (vs. +2.5% expected), which is the slowest growth since Q2 2022. But more alarmingly for markets, core PCE surprised on the upside, with an annualised rate of +3.7% in Q1 (vs. +3.4% expected). Headline PCE was also strong, at +3.4% in Q1, and core services ex housing (a measure Fed Chair Powell has cited in the past) was at +5.1%. So whichever way you crunch the numbers, this clearly isn’t the sort of inflation momentum where the Fed could be comfortable cutting rates. We’ll get the monthly US PCE numbers for March today within the spending report as well. If you’re looking for positives on growth, final private domestic sales came in at 3.1%, with the slowing in headline GDP growth coming from net exports, inventories and government spending. So domestic demand still holding up well. However you could argue that just ties in with the strong inflation component.

Unsurprisingly, that release meant markets dialled back the odds of rate cuts anytime soon. For instance, the chance of a rate cut by the July meeting fell from 50% the previous day to 34% afterwards. And for the year as a whole, futures are now pricing in just 34bps of cuts by the December meeting, down from 43bps the previous day and 67bps at the start of the month. So futures are now pricing the most hawkish profile we’ve seen to date in this hiking cycle, at least in terms of where rates are set to be by the end of 2024. Indeed for the first time, the first 25bp cut isn’t fully priced in until the December 2024 meeting.

With investors pricing out rate cuts, US Treasuries slumped and yields hit their highest levels of 2024 so far. In particular, the 2yr Treasury yield (+7.1bps) saw a closing value of 4.998%, having reached 5.02% intra-day. And similarly, the 10yr yield was up +6.2bps to 4.70%, although this morning it’s since come down -1.0bps to 4.69%. Bear in mind that just after Christmas, the 10yr yield hit an intraday low of 3.78%, so it’s moved up by almost 100bps from that point now. At the same time, there was a decent spike in real yields, with the 10yr real yield (+4.4bps) reaching a post-November high of 2.28%.

That trend was echoed in Europe, where investors lowered their expectations for ECB rate cuts this year, and now see just 68bps of cuts by December’s meeting, down -5.5bps on the day. As in the US, that meant 10yr yields hit new YTD highs, with those on 10yr bunds (+4.1bps) up to 2.63%, 10yr OATs (+3.7bps) up to 3.13%, and 10yr gilts (+2.8bps) up to 4.36%. For now at least, a June rate cut from the ECB is still seen as an 84% probability, but from Monday we’ll start to get the flash CPI prints for April, so it’ll be interesting to see if that changes anything.

For equities, this backdrop meant it was a tough day across the board even if the recovery was steady as the US session progressed. All the major indices fell, including the S&P 500 (-0.46%), the NASDAQ (-0.64%) and the Dow Jones (-0.98%). Rebounds by Nvidia (+3.71%) and Tesla (+4.97%) helped limit and reverse the earlier larger losses. But Meta (-10.56%) was the worst performer in the entire S&P 500 following its earnings release the previous day, meaning that the Magnificent 7 (-1.19%) underperformed despite the gains for Nvidia and Tesla. IBM (-8.25%) lost significant ground after its release the previous evening as well.

Over in Europe, the STOXX 600 (-0.64%) also saw a decent decline, although the FTSE 100 (+0.48%) was again an exception as it hit another record high, aided by a surge in Anglo American (+16.10%), which was the index’s best performer after BHP proposed a takeover. The proposed deal would bring together two of the world’s largest mining companies and create a clear number one globally. Our mining team think the deal rationale is about global scale and growth in copper, a structurally tight commodity which is key to future global electrification. Copper prices have risen by +17.6% so far this year, and overnight they’re trading at their highest level since April 2022. The mining team’s note (link here) runs through the deal terms and other talking points.

Looking at yesterday’s other data, the US weekly initial jobless claims fell to 207k in the week ending April 20 (vs. 215k expected), which is their lowest level in a couple of months. Otherwise, pending home sales grew by +3.4% in March (vs. +0.4% expected), reaching a 13-month high.

To the day ahead now, and data releases include US PCE inflation for March, along with personal income and personal spending. In addition, there the University of Michigan’s final consumer sentiment index for April, and in the Euro Area, we’ll get the M3 money supply for March. Finally, earnings releases include Exxon Mobil and Chevron.