Big slowdown in China! It’s not a surprise given the many restrictions and the ‘zero-Covid’ policy Beijing has adopted to deal with the pandemic, but the latest economic indicators announced on Monday provide a grist for the mill for those who forecasting the upcoming global recession. China’s weight in the world economy is obligatory. Retail sales dropped 11.1% in April compared to the same month last year, nearly twice as expected, and industrial production dropped 2.9%, its strongest decline since February 2020.
For financial markets, these data are almost uncertain because the risk of a sharp economic slowdown in the context of increased price pressure and rising borrowing costs remains the main concern of operators. Goldman Sachs boss Lloyd Blankfein also urged businesses and consumers to prepare for a recession in the United States, saying it was a “very, very high risk”. Bank economists have lowered their forecasts for growth in the United States. They now expect the economy to grow 2.4% this year and 1.6% in 2023, from 2.6% and 2.2% respectively.
While waiting for the next release from Fed members, including Chairman Jerome Powell, only the New York Fed’s Empire State Manufacturing Index for the month of May will be followed at the start of the week. In business news, soap opera Twitter continues to be in the middle of the stage as Walmart releases its quarterly accounts tomorrow. One day will also be marked by the publication of retail sales for the month of April as well as industrial production for the same month.
Wall Street, which remains on a six-week decline, is progressing without much trend in the pre-session. Despite its overwhelming rebound on Friday, the Nasdaq is still giving up 26.5% compared to its record in November 2021, at 16,057 pts.
In bond markets, interest rates rose again on Friday after several sessions of decline. They are making some progress this morning. The yield on the 10-year T-Bond thus rose 0.2 basis points to 2.920% and the rate on the 2-year T-Bond reached 2.59% (+1.2 bp). Last Monday, the “10-year” exceeded 3.10% and the “2-year” was 2.7%, the highest since November 2018, before undergoing a correction.
Gold seems to have lost appeal definitely, dropping another 0.6% to $ 1,800 for the June Comex futures contract. The yellow metal dropped nearly 4% last week, dropping to its lowest level in three and a half months.
Bitcoin, which fell to $ 26,000 on Thursday morning, was trading at approximately $ 29,687, almost stable for 24 hours, although still far from its November 2021 record at nearly $ 69,000.
Finally, oil prices fluctuate slightly at the beginning of the week. The barrel of American WTI light crude (June futures contract) fell 0.4% to $ 110 on the Nymex, while the Brent North Sea fell 0.7% to $ 110.8. Crude prices are torn between two opposing forces, on the one hand the slowdown in demand due to the less dynamic economy, specifically in China, and on the other hand, the fear of a decline in tied supply. on a European embargo on Russia’s oil. , currently being discussed within the EU. This embargo project, which requires the unity of the 27 Member States to ratify, is still being blocked by Hungary, which is heavily dependent on Russia’s oil and gas.
* JetBlue Airways does not give up. While Spirit Airlines is currently favoring Frontier Group’s lower takeover bid, JetBlue now intends to launch a competitive takeover bid for its cheap competitor. According to people familiar with the matter quoted by the ‘Wall Street Journal’, JetBlue plans to directly appeal to Spirit shareholders in launching its hostile acquisition, hoping to force Spirit’s leadership to resume negotiations. . At the same time, JetBlue will ask Spirit shareholders to vote against the planned merger with Frontier Group on June 10 in a further effort to influence the company’s executives. As part of its offensive, JetBlue will offer $ 30 per share in cash, but will be willing to raise its offer to $ 33 per share (the value of its initial offer) if Spirit agrees to go into negotiating table and provide the data requested by JetBlue. The tender offer is expected to begin on Monday, May 16 and remain open until June 30, although JetBlue may extend this period, sources told the WSJ. JetBlue is said to have started meeting with some Spirit shareholders.
Spirit is the subject of a standoff between two rival carriers who both see the Florida-based airline as key to their ability to grow and challenge big names in the American industry. Spirit agreed in February to take on Frontier, a Denver-based discount airline, in a $ 2.9 billion cash and stock deal. But JetBlue retaliated in April by unveiling an unsolicited offer of $ 3.6 billion in cash, arguing that the merger with Spirit would create a stronger competitor. Spirit declined the offer, however, because the carrier’s board deemed there was too great a risk that antitrust regulators would ban such a deal. To convince Spirit’s management, however, JetBlue undertook to sell several assets, particularly all of Spirit’s assets in New York and Boston, and added to its offer breach of contract damages of $ 200 million in case the transaction fails for antitrust reasons. An inadequate attempt for the moment. Whatever the winning combination, it will result in the creation of the fifth American carrier behind the three incumbents and Southwest.
* Twitter fell 9.6% to $ 40.72 on Wall Street on Friday, as the richest man on the planet, Elon Musk, vowed to take over the social media network for $ 54.2 per share, $ 44 billion in total, suspending its offer ! “The Twitter agreement has been temporarily suspended pending details supporting the calculation that spam / fake accounts actually represent less than 5% of users”, tweeted the businessman, Tesla boss and SpaceX, which linked to a ‘Reuters’ article related to these “false” estimates, article dated May 2.
This article from the news agency refers to Twitter’s estimate that fake accounts and spam accounted for less than 5% of total daily active user revenue in the first quarter. Over time, the social network had 229 million users where ads were offered. Musk, which proposed in April acquiring the platform for 44 billion dollars, also estimated that one of the priorities was to remove ‘spam bots’ from the network.