Housekeeping: Good Morning.
Bretton Woods Three is a Process, Not an Event.
Today:
Premium: CPI/ UBS reaffirms Gold Target of $2500
Commentary: What to look for in CPI
Markets Yesterday:
US equities advanced on Friday as investors continued to negotiate Fed rate decisions and incoming US economic data
Premium/Markets:
Last week markets reacted to economic data that showed a slowdown in productivity indicating a recession was inching even closer. This week is CPI. The last few data releases had come in stronger than expected indicating the deflationary impulse that started when Powell began raising rates was dead and gone.
If CPI should surprise by coming in softer this time, there could be very real fireworks. Meaning: Based on the momentum of economic data like productivity and unemployment, the economy is now rolling over again. By his own admission Powell and company expect to ease this year at least one time. The market expects this to happen in July now.
Powell was uncharacteristically optimistic at the FOMC press conference saying “inflation will get to 2%”. We and others like Standard Charter think the data support his optimism. If CPI were to come in soft, and it could given certain data points, then you’d likely see a “risk on type move where stocks, Gold, and even bonds rally.
UBS: A second wind for gold.
Our view: While gold prices have faced some recent rate-related headwinds,we have retained our bullish forecasts and expect gold prices to rise to USD2,500/oz this year. …some investors may also consider structured strategies to purchase gold at levels below our forecast trajectory six months out. Goldminers are another way to express this view through equities, though they are more tactical in nature.
Much more including GoldFix Analysis at bottom…
News:
"Stalled inflation this year hasn’t derailed the Federal Reserve’s plans to eventually cut interest rates. Source: WSJ opinion as news
"President Joe Biden’s top economic adviser pledged Democrats would push to reverse Donald Trump’s corporate tax cuts next year, Source: Bloomberg- hurts business
"Sam Altman, best known as the CEO of OpenAI, is also chairman of a nuclear power company called Oklo, which has just gone public through a special purpose acquisition company. Source: CNBC- AI infrastructure
"Superpowers led by the US and European Union have funneled nearly $81 billion toward cranking out the next generation of semiconductors, escalating a global showdown with China for chip supremacy. Source: Bloomberg - chip-wars
"The Biden administration is preparing to raise tariffs on clean-energy goods from China in the coming days, with the levy on Chinese electric vehicles set to roughly quadruple. Source: WSJ- its not about climate
Geopolitics:
Israel’s IDF said it ordered residents of additional east Rafah areas to evacuate and head to the humanitarian zone in Al-Mawasi, according to Reuters.
Ukrainian President Zelensky said battles are ongoing at seven border villages in Kharkiv and the Donetsk situation is particularly tense, while Ukraine’s military chief said fighting is ongoing and warned of a difficult situation in the Kharkiv region, according to Reuters.
Russian state media is confirming a development that President Putin has removed his longtime Defense Minister and personal friend Sergei Shoigu as defense chief, who has overseen the Ukraine war since its beginning in Feb. 2022. He will now serve as head of the nation's security council.
Russian Defence Ministry said its forces have taken five settlements in Ukraine’s Kharkiv region.
Some headlines via NewSquawk or DataTrek
Data on Deck: PPI then CPI
MONDAY, MAY 13 speakers
TUESDAY, MAY 14 8:30 am Producer price index April
WEDNESDAY, MAY 15 8:30 am Consumer price index
THURSDAY, MAY 16 Initial jobless claims May 11 219,000 231,000 8:30 am Philadelphia Fed
FRIDAY, MAY 17 10:00 am U.S. leading economic indicators April1
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