Bloomberg Daybreak: Europe 03/21/2024

Summary

The S&P 500 hit another all-time high as the Federal Reserve maintained its outlook for three U.S. rate cuts this year. The focus now shifts to European central banks, with the Bank of England, Swiss National Bank, and Norges Bank all expected to deliver policy decisions. Meanwhile, the U.S. Justice Department is reportedly preparing to sue Apple for violating antitrust laws, and Hermès faces a class-action lawsuit alleging the company is breaking U.S. antitrust laws by making customers purchase additional products to access its Birkin handbags.

Takeaways

• 📈 The S&P 500 reached another all-time high as the Federal Reserve maintained its outlook for three U.S. rate cuts this year.
• 🌍 Focus shifts to European central banks as the Bank of England, Swiss National Bank, and Norges Bank are expected to deliver policy decisions.
• 📊 Market reactions show euro Stoxx 50 and Footsie 100 futures higher, continuing the positive trend from the U.S. session.
• 💹 Despite inflation upticks, the idea of rate cuts on the horizon has not changed, indicating continued optimism in equities.
• 🛠️ The bond market shows some dislocation with the equity market, as rate cuts are priced in, but the ten-year yield remains unchanged.
• 🌐 Asian markets, particularly tech and cyclical stocks, perform well with the region's stock gauge hitting a two-year high.
• 🔄 There's a divergence between the Philly Semiconductor index and tech-heavy indices in the Asia-Pacific, suggesting potential catch-up.
• 💲 The U.S. dollar's value against the euro and Swiss franc is influenced by the anticipated central bank decisions.
• 📉 Powell's statements suggest a gradual decrease in inflation with some bumps along the way, maintaining the outlook for rate cuts.
• 🏦 Barclays and Citigroup are reportedly preparing to cut several hundred jobs within their investment banking divisions.
• 🛫 Boeing predicts a significant cash drain for the first quarter due to regulatory scrutiny and slower output of its 737 Max aircraft.

Q & A

What is the current outlook for the S&P 500 according to the Federal Reserve?

The S&P 500 is currently hitting new all-time highs as the Federal Reserve maintains its outlook for three U.S. rate cuts this year.

What does the Federal Reserve's statement imply about the U.S. economy?

The Federal Reserve's statement implies that if the U.S. economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year.

What central banks are expected to deliver policy decisions later in the day according to the transcript?

The Bank of England, the Swiss National Bank, and Norges Bank are all set to deliver policy decisions later in the day.

How is the market reacting to the Federal Reserve's decision?

The market is reacting positively, with futures on the euro Stoxx 50 and the Footsie 100 both higher, indicating that the momentum from the U.S. session is continuing into the Asian and European sessions.

What does the transcript suggest about the bond market's reaction to the Federal Reserve's meeting?

The bond market has shown some dislocations, with the affects market and the bond market being uncorrelated. The ten-year yield remains unchanged at the moment, despite the Fed change.

What is the current situation with the tech sector according to the transcript?

The tech sector is doing well, with cyclical stocks running nicely and the gauge for stocks in the region climbing by the most in four months. Chip stocks are expected to perform well, with companies like Micron, Samsung Electronics, and SK Hynix showing sales recovery in the first half of the year.

What does the transcript reveal about the U.S. Justice Department's plans for Apple?

The U.S. Justice Department is said to be poised to sue Apple for violating antitrust laws, with Apple being accused of blocking rivals from accessing hardware and software features of its iPhone.

What is the current financial prediction for Boeing?

Boeing has predicted a massive cash drain for the first quarter due to regulatory scrutiny and slower output of its 737 Max, which is taking a toll on the company's finances.

What is the World Trade Organization's chief economist's view on the state of globalization?

The chief economist, Ralph Aissa, believes that there are signs of fragmentation along geopolitical lines rather than any massive globalization. He notes a shift in trade shares away from China to the U.S. and other economies.

What is the current situation regarding Ukraine's military recruitment?

Ukraine's prime minister has indicated that military recruitment could be scaled back as more aid arrives, with the U.S. funding potentially arriving as early as this month.

What is the Swiss National Bank's position on the Swiss franc?

The Swiss National Bank is considering a potential rate cut due to lower than expected inflation and the strength of the Swiss franc since the beginning of the year.