May 31, 20233 min read

Weaker China data, softer EZ inflation / USD firmer still / HSI ⏬ 20% YTD / WTI sub $70

Very few U.S.-China flights are back despite the end of Covid, Fewer than 6% of U.S. flights to and from mainland China that existed in 2019 have resumed, pretty astonishing data, China manufacturing PMI dips in May (48.8), falls short of expectations. Key manufacturing gauge underscores unstable post-COVID recovery
US Debt Limit: The House Rules Committee has met to decide if the debt limit bill gets a full vote. Two far-right Republicans on the panel oppose it, and a GOP backbencher called for Kevin McCarthy's ouster. House passage on Wednesday is critical to getting Senate approval by the Monday deadline
FED pricing has been a little more hawkish since mid May >> now market pricing in about 1 more hike in June, before 1 to2 cuts by end of 2023
Since market’s October low, S&P 500 Tech sector’s forward P/E has soared by nearly 46%, while forward EPS are still down
UK : The “shy capitalists” want more of their own money, not toxic culture wars
South Africa grants Putin and Brics leaders diplomatic immunity for summit
First regional inflation prints surprised massively to the downside, with North Rhine Westphalia CPI 1% below exp in May >>> very decent downside surprises in French CPI (for example) and a big MoM drop in the PPI too, ''disinflation has arrived''
Fidelity marks Twitter valuation down to $15bn, that's a 3rd of what Musk paid for it
The White House says "we do not support attacks inside of Russia" following the drone strikes in Moscow. The statement also said, their "focus is on helping Ukraine re-take its sovereign territory"
ECB's Müller : probably too optimistic to see ECB rate cut in early 2024

Markets :

Crude WTI dropping back below $70, as a Fed hike in June become more likely following PCE, and OPEC+ seems likely to leave output unchanged at 4th June meeting, some chatters of 'no bids in Brent for july'.. EU NatGas lower lower, so cheap now again !!.. EU Natural Gas - 2023 Data - 2010-2022 Historical - 2024 Forecast - Price - Quote (tradingeconomics.com)
USD firmer again, weak european and China data overnight, USDCNH 7.12 (AUDUSD sub 0.6500), while EURUSD sub 1.0750, it should stay offered
The divergences between various parts of the markets are beginning to be quite alarming IMHO, it all 'looks well' to very well (NVDA, AI, well overbought now, but in reality it isn't pretty underneath AI and megacaps
Commods : “China Logistics Information Center says the key problem with China’s economy is insufficient new demand, which leads to decreasing raw material purchases by companies”