Fed: More hawkishness in 2025?
- Fed’s meeting last week proved as dovish as it could be – three cuts expected in 2024 even with a recent new increase in inflation and economic growth still going strong
- Chair Powell emphasized that the strong inflation numbers for January/February should be seen in a
broader context of cooling inflation – in other words: the Fed wants to cut! - Nevertheless, upgrades to growth forecasts for 2025 and 2026 could lead to more hawkish moves in the years to come
Fed's "Personal" favorite
- Friday will see the publication of the Personal Consumption Expenditure (PCE) price index
- This is the Federal Reserve’s favorite inflation gauge
- Its dynamic composition is deemed to be better at reflecting changing spending patterns
- Housing has a far lower weight than in the CPI*
- Healthcare covers a wider range of payments
- Core inflation should remain stable at 2.8% year-on-year, and headline inflation could rise from 2.4% to 2.5% – In line with CPI published a fortnight ago
- Doesn’t change the Fed’s plans to cut rates in 2024…
- … but could it postpone its decisions?
Nuclear Summit 2024
- The first ever Nuclear Summit 2024 took place on March 21st in Brussels
- COP28 included nuclear energy in the “global stocktake”
- It calls for an acceleration in the deployment of nuclear energy along with other low carbon energy sources
- Yet, widespread adoption is an uphill struggle:
- Mining and enrichment are concentrated in a few countries
- New geopolitical risks
- Cost and time overruns
- Promising technologies like SMRs(*) are far from deployment
Chemicals - Back from the brink
- Volume recovery started after almost two years of destocking
- The Chemicals IFO* index shows further improvement in current conditions
- Good news from China, where the leading indicator has posted its biggest monthly increase since 2005
- European spot energy cost relief rolling in, positive for plant utilization and earnings
- Improving visibility should be a tailwind for the sector
- A comeback of chemicals implies a recovery in industrial stocks
Bitter Easter
- Cocoa futures shot up from $3,000/t in June 2023 to almost $10,000/t yesterday
- Major producing countries are Ivory Coast and Ghana, but also Ecuador, Cameroon, Nigeria and Brazil
- Extreme weather and crop disease are the immediate culprits
- EU regulation on deforestation is also at play
- Aging plantations are a structural headwind
- While not a basic staple, it shows the impact of weather and the fragility of globalisation
- Consumers face a dearer Ester Egg or Bunny
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