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Markets are bouncing this morning after two down days to start the week.

The dollar index started the month flirting with multi-month highs but is falling today, affording breathing room for risk assets like tech equities and crypto to rise.

Jay Powell is winding down a Q&A at Stanford University as we write this intro.

He said he expects AI to boost productivity in the future, but it’s not showing up in the data quite yet.

Increased productivity is the only serious answer to the elevated levels of global debt, as it could unlock powerful deflationary forces, allowing central bankers to print as much money as they want without causing high levels of price inflation.

Powell also reiterated he expects to cut interest rates this year, but didn’t provide any new guidance on frequency, date or magnitude.

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Good Data Sends Sends Equities Lower & Gold Higher

WHAT HAPPENED:

• Gold Soars, Other Assets Suffer: Gold reached a new record high, hitting $2277 per ounce, amidst good economic indicators. In contrast, bonds, stocks, and Bitcoin faced downturns as positive economic news led to slightly decreased rate-cut expectations for 2024.

• Fed Officials Urge Patience: Federal Reserve officials, including Loretta Mester, emphasized the need for more data before considering rate cuts, pointing to risks of acting too prematurely amidst solid labor markets and economic growth.

• Market Movements:

  • Yields on long-term bonds rose, with the 10-year Treasury note reaching its highest level since November 2023.

  • The stock market's momentum faltered, particularly for small caps and heavily shorted stocks.

  • Bitcoin experienced declines, potentially due to a significant transaction from a decade-old wallet containing the coins seized by US law enforcement from the defunct dark market exchange, Silk Road.

  • Ether fell more than bitcoin did, leading the ETH/BTC ratio to its lowest since April 2021.

• Commodity Updates:

  • Silver prices surged, reaching $26 for the first time since May 2023.

  • Crude oil prices climbed above $85 per barrel, marking the highest point since October 2023.

• Inflation and Growth Concerns: Citi's inflation-surprise index reached its highest level since December 2022, amid stagnant growth expectations, heightening concerns over potential stagflation.

WHY IT MATTERS:

• Stagflation Fears: The contrasting trends of rising inflation indicators and mixed growth signals are fueling concerns over stagflation, a challenging environment characterized by slow economic growth and high inflation.

• Federal Reserve's Policy Direction: The Fed's cautious stance on rate cuts, amidst signs of economic resilience, underscores the delicate balance it seeks to maintain between controlling inflation and supporting economic growth.

• Market Sensitivities: The market's reaction, with gold soaring and other assets struggling, reflects growing investor anxieties about inflation and the possibility of a hawkish policy error by the Fed. The divergent performance of commodities, currencies, and equities illustrates the complexity of the current economic landscape, influencing various investment strategies.

Zerohedge

Tesla Misses Delivery Expectations, Stock Falls 10%

WHAT HAPPENED:

• Tesla (NASDAQ: TSLA) regained the top spot in global battery electric vehicle (BEV) sales, surpassing BYD in Q1 2024, after losing the crown to BYD in Q4 2023.

• Despite this achievement, Tesla's delivery numbers were less than stellar, with a significant drop both year-over-year and from the previous quarter. Tesla delivered 386,810 vehicles globally, marking an 8.53% decrease from the same period last year and a 20.16% drop from Q4 2023, missing analyst estimates of 449,080 units.

• This downturn is attributed to several operational challenges, including the early phase of production ramp-up for the updated Model 3, factory shutdowns due to shipping diversions caused by the Red Sea conflict, and an arson attack at Gigafactory Berlin.

• Tesla's stock has suffered, down over 30% year-to-date, ranking it among the S&P's worst performers, exacerbated by production and delivery shortfalls.

WHY IT MATTERS:

• Tesla's recent performance highlights the volatile nature of the EV market and the operational risks associated with global manufacturing and geopolitical tensions. The significant reliance on the Chinese market underscores the strategic importance of Tesla's Shanghai factory, both for local deliveries and as an export hub.

• Guggenheim analyst Ron Jewsikow notably slashed his price target for Tesla to $122 from $132.

• The year-on-year decline in deliveries for the first time since Q2 2020 signals potential headwinds for Tesla, challenging the company to navigate operational bottlenecks and sustain its market leadership amidst intensifying competition.

CNEVPost, Yahoo Finance

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The BRRR is meant for informational purposes only. It is not investment advice. Please consult with your investment, tax, or legal advisor before making any investment decisions.ll