【True Zoom Finance】April 16 Market Morning Brief: U.S. March retail sales show strong growth; Tesla to cut over 10% of global workforce

"Bloomberg: Weak demand for electric vehicles has led Tesla (TSLA.US) to conduct its largest-ever global layoffs, with two key deputies of CEO Elon Musk also departing. Insiders reveal that some departments are facing layoffs of up to 20%."

Overnight Highlights

• Strong U.S. retail data further dampens Fed rate-cut prospects, with mega-cap tech stocks dragging the S&P 500 below 5,100. The 10-year Treasury yield hits a yearly high, the dollar index rises to a 5-month peak, the yen falls to its lowest since 1990, and safe-haven demand pushes gold toward record highs. Oil prices drop as Iran's weekend attack on Israel proves less destructive than expected, easing concerns about potential crude supply disruptions. $Hang Seng Index(00HSI.HK)

International News

• U.S. March retail sales exceed expectations, rising 0.7% month-on-month (unadjusted for inflation). Excluding autos and gas, sales grow 1%, with upward revisions to prior data indicating resilient consumer demand that may support strong Q1 economic growth.

• New York state's manufacturing activity contracts for the fifth consecutive month in April, with a raw material price index hitting a near one-year high.

• NY Fed President John Williams states the central bank may cut rates this year if inflation continues gradual decline, dismissing recent data as a "turning point" but acknowledging its impact on forecasts.

• Wells Fargo Investment Institute raises its 2024 year-end S&P 500 target from 4,800-5,000 to 5,100-5,300, citing improved U.S. economic outlook and accommodative financial conditions.

• Demand for the Fed's overnight reverse repo facility drops to a near three-year low of $327.1 billion from $407.3 billion.

• ECB Governing Council members Olli Rehn and Gediminas Simkus signal potential June rate cuts if inflation slows as expected, with at least three reductions anticipated this year.

• Reuters: Sources indicate the Bank of Japan will adopt a more discretionary policy approach, de-emphasizing inflation targets. Despite projected 2% inflation through early 2027, this alone won't strongly signal near-term hikes.

• Bloomberg: Tesla (TSLA.US) implements record global layoffs due to weak EV demand, with two top Musk lieutenants exiting. Some departments face ~20% cuts.

• Reuters estimates show Russia has rapidly repaired key refineries damaged by Ukrainian drones, reducing offline capacity from ~14% in late March to ~10%. Attacks on energy infrastructure have driven oil prices higher.

Greater China News

• China's PBOC holds 2024 financial stability meeting, urging systemic risk prevention and macro-level early warning systems.

• Economist Intelligence Unit notes China's manufacturing overcapacity has peaked amid global demand recovery, predicting sustained trade tensions as Chinese firms gain competitiveness.

• Bloomberg: China Vanke (2202.HK) prepares a ~¥130B ($18B) asset package as collateral for new bank loans, per sources.

• National Review reports Republican Senator Tom Cotton urges President Biden to investigate Temu and close tax loopholes for its imports.

• China's MIIT list shows multiple BYD (1211.HK) NEV models qualify for vehicle tax exemptions.

Commodities & FX

• Oil remains a top-performing commodity in 2024 as OPEC+ supply cuts reduce inventories. Middle East tensions could push Brent to $100/barrel, with SocGen warning U.S.-Iran conflict may spike prices to $140. JPMorgan notes crude premiums depend on Israel's response.

Earnings & Data Watch

• China Q1 GDP YoY (est: 4.6%, prev: 5.2%)

• China March retail sales YoY (est: 4.6%)

• China March industrial output YoY (est: 6%)

• U.S. March housing starts (est: 1.483M, prev: 1.521M)

• U.S. March building permits (est: 1.515M, prev: 1.524M)

Source: Goldhorse Capital Extramile

Author: Terry Chow