Dow futures jump over 200 points as earnings roll in

Live3 updates

• Tue, April 16, 2024 at 7:55 AM EDT

  Chatting interest rates and markets with BNY Mellon’s CEO

  I just had a good post earnings chat with BNY Mellon (BK) CEO Robin Vince (they reported this morning, stock up 2% pre-market).

  Appreciated his thoughts on rates and markets to me (below. I took them as inflationary!

  “As I think about the path of interest rates, there are a few things that are going on in the world. Clearly, we’ve got geopolitical risks that are out there and just today the potential escalation of the ongoing (Israel/Iran) conflict – that’s certainly a risk. We’ve got consistently, relatively high inflation in the US and that’s clearly a bit of a risk. So that brings into some question the path of interest rates. We’ve got fiscal challenges in the US and the continued (high) amount of issuance of US Treasuries from a volumes point of view. That can be quite good for our business, but as a citizen and a taxpayer, you have to worry a little bit about the path of debt sustainability in the United States. So there’s a lot going on.

  Now, I’ll give you the flip side as well because what we see is really strong, underlying underpinnings for the US economy and it’s not to say that we won’t have a correction at some point in the stock market – that could well happen. It’s not to say we couldn’t have a recession at some point. That’s kind of inevitable at some point in time. But when you look at the advantages that the US has right now, it’s got a lot of significant advantages on a relative basis in the world. It’s a great destination for investment. You can hear that from CEOs internationally. You can see it from investors putting their money into the United States, you can see the performance of the stock market, and there are a lot of tailwinds that are coming into the markets right now. So I would say it’s a place you have to be prepared for all eventualities. Could we see the Fed stay on hold, maybe. Could we see the Fed cut rates this year? Probably. Could we see the Fed hike rates? Not impossible. You got to be prepared, but at the same time, the underlying direction of travel for the US is pretty positive.”

• Tue, April 16, 2024 at 7:02 AM EDT

  Bring on those Starbucks earnings

  Starbucks (SBUX) earnings will be out in a few weeks, and note upon note I have consumed suggest the report could be ugly.

  Most of the concern on Starbucks at the moment stems from falling store traffic in the US, in part because prices for what Starbucks sells has gone through the roof. I paid $7 for a venti cold brew at a NYC store a week ago (I have been cutting back trips to Starbucks)!

  Bernstein is out this morning with a fresh look at store traffic, and it isn’t pretty.

  Starbucks shares year to date: -11.3%.

• Tue, April 16, 2024 at 6:56 AM EDT

  Markets quote of the morning….

  Stock futures have been all over the map this morning after Monday’s hot retail sales report driven drubbing.

  The indecision on the part of investors comes as they are still clinging to hopes of a June interest rate cut, which seems unlikely given how the macro data has trended in April.

  I think JP Morgan’s strategy team offers up a good blunt take on markets this morning as if to level set investors:

  “For a market reliant on immaculate disinflation, a dovish Fed reaction function, and diminishing tail risks on growth, the continuation of hot growth and inflation data can bring us to a tipping point where a tighter stock vee bond risk premium finally produces a market correction. Inflation risks are also compounded by upside risks to oil due to geopolitical developments related to Russia and risk of further escalation in the Middle East. Additionally, investor positioning is elevated, with cash allocations at historical lows.”