Pre-market equities: Did US inflation peak in March? Americans are worried

After already hitting 7.9% in February, economists are hoping that violent inflation peaked in the first quarter. But there are plenty that will keep prices high for the rest of the year and consumers are worried. Although the Federal Reserve has begun to tighten monetary policy to bring inflation under control, prices are still rising.
In a year, consumers expect inflation to be at 6.6%, according to the New York Fed’s Survey of Consumer Expectations. It was a new high for the survey and a marked increase from 6% in February.

The unloading comes as the war in Ukraine drives up the prices of energy and agricultural commodities.

To keep pace with rising prices, Americans also expect their household spending to rise in the coming year, the survey showed. Expenditure expectations rose to 7.7%, also a new high for the New York Fed’s survey and the biggest leap in one month since the series started in 2013.

Economists surveyed by Refinitiv predict that the consumer price index for March will hit 8.4%, which would match the level from January 1982 and mark a new high in 40 years.

Whether it really is the inflation peak remains to be seen as the Ukraine conflict continues to add price pressure. Americans faced sky-high prices at the pump in March, while food inflation is expected to remain high throughout the year.

So what to do?

The Fed has already begun rolling back its pandemic stimulus, including raising interest rates last month for the first time since 2018. The central bank is expected to continue to raise interest rates this year to bring inflation under control.

Market expectations for a rare half-percentage point increase at the Fed’s next meeting in early May are above 80%.

But there is concern that the Fed’s actions could do more harm than good.

“If the Fed decides to bring 8% inflation down to theirs [roughly] 2% target on its own, it’s hard to do without causing a recession, “said strategists at Baird Private Wealth Management. Analysts at German bank (DB) and Goldman Sachs (GS) has already warned that the Fed’s attempt at a soft landing could end up pulling the economy into a recession.

Russia rejects ‘default’ as it tries to pay in rubles

Bills fall due, putting Russia on track for its first default on foreign debt in a century.

On Friday, the rating agency S&P said that Moscow offered bondholders payments in rubles, not dollars, which is equivalent to a “selective default”. In other words, investors are unlikely to be able to convert these rubles into dollars equivalent to the outstanding amounts, which means that even if Russia pays, the country is defaulting on its obligations.

Here it’s a bit murky: Moscow has a 30-day grace period from April 4 to make payments on capital and interest. It will be difficult to do under Western sanctions.

To be sure, Russia has the money. It just can not access a lot of it.

Since 2014, the Kremlin has built up about $ 640 billion in foreign exchange reserves. More than half of these funds are now frozen under Western sanctions imposed after the invasion of Ukraine.

Russia plans to contest the “standard” mark, although it is not clear how.

“We will sue because we took all necessary measures so that investors would receive their payments,” Finance Minister Anton Siluanov told the pro-Kremlin newspaper Izvestia on Monday.

“We will show the court proof of our payments to confirm our efforts to pay in rubles, just as we did in foreign currency. It will not be a simple process,” he added. He did not say who Russia planned to sue.

Kremlin spokesman Dmitry Peskov said at a news conference last week that any default would be “artificial” because Russia has dollars to pay – it just does not have access to them.

“There is no reason for a real default,” Peskov said. “Not even close.”

Musk’s Twitter U-turn

The saga has been downright dizzying.

After a whirlwind week in which Twitter announced that Elon Musk had become its largest shareholder and would join the board, Twitter (TWTR) CEO Parag Agrawal said Sunday night that Musk would not become director anyway.

It’s an amazing development even for Twitter, a company that is certainly no stranger to corporate chaos, writes my colleague Clare Duffy. And that could be the start of many headaches for the relatively new CEO.

Musk still has its 9.2% share and more than 80 million followers on the platform. In other words, he might say no to the board seat, but he’s almost certainly not done trying to shake Twitter.

Some analysts expect Musk to try to buy even more of the company’s shares now that he’s unbound by the board’s decision to limit his ownership to 14.9%. If Agrawal has so far dealt with a friendly Musk, one can only imagine what a hostile approach would look like.

In an investor note Monday, Wedbush analyst Dan Ives outlined a few possible scenarios for Musk’s next move, including joining a private equity partner to force changes or even to orchestrate a takeover. Or Musk could simply continue to “create more noise and anxiety for the Twitter Board / leaders.”

At the end of the day, Musk is a wild card and he is now a force strong enough to undermine Agrawal’s leadership, just as he has taken over.

Next

The US Bureau of Labor Statistics publishes its US Consumer Price Report at 8:30 ET.

Also today: Earnings from CarMax (KMX) and Albertsons.
Coming tomorrow: US producer prices; earnings from JPMorgan Chase (JPM), Delta (FROM), Black stone (BLK) and Bed Bath & Beyond (BBBY).

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