Torsten Slok: a 'significant rise' in stocks & cash flows from fixed income gave households $$$ 'to travel...stay at hotels, eat at restaurants, go to sporting events, amusement parks & concerts, and that is why inflation in the non-housing service sector continues to be so high'

Citi with...a take:
'Markets are now pricing less than two 25bp rate cuts this year, while we are forecasting five.'

Bank of America changing their base case: 'We now expect rate cuts to start only in December, and have raised our terminal rate forecast by 50bp to 3..5-3.75%

INBOX: Bank of America - in the June Fed cut camp as recently as Monday, drops a bombshell: 'One cut in 2024'

'We now expect the Fed to start cutting rates in December. We no longer think policymakers will gain the confidence they need to start cutting in June'

(4 cuts in 2025)

WELLS: “.. We lower our FY deliveries to -12% (flat prior). .. We est. ~160K cars could be in inventory adding to [pricing] risk. Low leasing also raises concerns.”

Cuts target to $120. Reiterate Underweight. $TSLA

Our own David Hollerith points out that $JPM's NII was based off 3 cuts, and the bank hasn't factored in changes from this week's data, so that number could be revised up.

$JPM CEO Jamie Dimon's Q1 2024 commentary: 'Many economic indicators continue to be favorable. However, looking ahead, we remain alert to a number of significant uncertain forces'

And Sonali Basak smartly pointing out that you have an upward adjustment of $JPM's full year expenses - higher for longer could become the story over NII

Don't Be Afraid

'On average since 1970, the S&P 500 has done better 1, 3, and 5 years after making an all-time high than picking a random day.'

buff.ly/49yeu0V

by Michael Batnick

Add BofA to the growing list of banks changing rate cut calls:

UBS: June to September
Wells Fargo: June September
Goldman: June to July
Citi: holding to June, later cuts are increasingly likely

Some of the banks changing base cases for Fed cuts:

UBS: June to September
Wells Fargo: June September
Goldman: June to July
Citi: holding to June, later cuts are increasingly likely

Market reaction to Market reaction to
CPI data: PPI data:

Today’s Yahoo Finance Chart of the Day: Investors are scaling back rate cut expectations.

This hasn’t weighed too heavily on the stock market rally, though. We asked strategists why and if it can continue:

yahoo.trib.al/K9FK3in

Citi economists still holding onto their June call for rate cuts but adding likelihood of later cuts 'more likely'

US credit-card delinquency rates were the highest on record in the fourth quarter, according to a Federal Reserve Bank of Philadelphia report. bloomberg.com/news/articles/… via Bloomberg Economics

'The MSCI Emerging Markets Index rose for a third day, cementing its strongest level since June 2022.'

Srini Sivabalan

'Earnings upgrades from analysts have outnumbered downgrades in the first quarter, according to a Citigroup Inc. index.'

John Viljoen

Real news in today's Federal Reserve minutes is on balance sheet reduction. Staff briefed options for tapering. Policymakers:
'Generally favored' reducing $60b monthly cap by half;
Saw no need to trim $35b MBS runoff;
'Vast majority' favored tapering 'fairly soon.'
1/2

How would the Fed view today’s CPI surprise? First, consider how they view the Jan and Feb surprise:

According to FOMC minutes, “Some” participants didn’t discount the strong inflation readings in January and February, though “a few” said residual seasonality contributed to…

My story for what has happened to inflation and what it means going forward.

TL;DR: Underlying inflation fell from 4.0-4.5% to 2.5-3.0% as labor markets loosened (through openings down not unemployment up). Last mile will be much harder than to date.

A shortish 🧵