MARKET MOVERS
- Microsoft rises, Alphabet falls. Revenue in Microsoft’s fiscal third-quarter rose 18% to $49.4 billion. At its Intelligent Cloud segment, which includes the company’s Azure cloud business. Meanwhile, YouTube experienced slower growth of direct-response ads, which had a lot to do with Apple defanging a feature on its platform known as IDFA. YouTube is also being disrupted by TikTok. Read more here.
- Oil prices rise and natural gas surges as Russia cuts supplies to Eastern Europe. Russia halted Poland and Bulgaria’s access to natural gas, sending prices up 24%. Both countries rely on the giant Russian firm for more than half of its supplies. Heeding calls from the European Union, the two countries have resisted Russia’s demands for them to pay in rubles rather than dollars or euros after sanctions from the invasion of Ukraine.
- Energy’s in a supercycle, says JPMorgan. The firm said that as demand for energy grows, and with countries looking to shore up their fuel reserves, capital will flow to areas across the energy complex. Specifically, the firm favors companies with exposure to solar energy, liquified natural gas and oil. Within renewables utility companies, NextEra and Sunrun are among the firm’s best ideas. Read more here.
- U.S. trade deficit in goods jumps 17.8% to record $125.3 billion. This reflects America’s huge demand for imported goods and rising prices tied to high inflation. U.S. imports of oil, autos and consumer goods such as cell phones jumped 11.5% to a record $294.6 billion in March. Higher oil prices help explain part of the increase in the U.S. trade deficit. Exports of American-made goods shot up 7.2% to $169 billion.
- Saudi Arabia orders up to 100,000 electric vehicles from Lucid. The Tesla competitor backed by the Saudi wealth fund plans to build a manufacturing facility in the kingdom. The decision was in line with efforts to make its fleet more environmentally friendly and diversify the national economy away from oil. Lucid was selected, the government said, because the company is setting up a full production factory in Saudi Arabia.
- Pending home sales decreased 1.2% in March. This signifies five straight months that contract activity has declined, according to the National Association of Realtors®. Month-over-month, only the Northeast saw an increase in contract signings, while the three other major U.S. regions experienced declines in transactions. All four regions reported decreases in year-over-year contract activity.
WHAT TO WATCH
- Big Oil could post its best earnings in years. There is a structural shortage of oil for the next few years. Companies simply aren’t drilling enough to catch up to the surge in demand. Western oil companies are also poised to benefit from the surge in energy prices worldwide since Russia invaded Ukraine in February. Those dynamics should lead to the most impressive earnings results in years for the companies.
- Home-price growth is likely to take a step back in coming months, with diminished buying power and mortgage rates pushing above 5% in recent weeks. It's expected for price increases to slow markedly over the course of this year as sales volumes fall. The macroeconomic environment is evolving rapidly and may not support extraordinary home-price growth for much longer. Read more here.
- Mastercard is expected to report strong earnings results despite headwinds. This is because rival VIsa reported earnings per share of $1.70 on revenue of $7.2 billion for the three months ending on March 31.Visa beat estimates and provided an outlook that is better than expected, despite the headwind from Russia and all of the other events impacting markets right now. Mastercard is expected to report a strong outlook tomorrow. Read more here.
- Deutsche bank forecasts a major recession late next year. The bank said that the scourge of inflation has returned and is here to stay. While we may have seen the highs now, it will be a long time before it recedes back to acceptable levels near the Fed’s 2% target, suggesting that interest rates would likely be raised significantly by the central bank, and in turn, would harm the economy. Read more here.
