Macroeconomics: The Day Ahead for 25 April

US Q1 advance GDP tops a relatively busy day for statistics, with South Korea’s much better than expected Q1 GDP, German Consumer Confidence (best since April 2022, but still weak) and French Business (unexpectedly declining) to digest, while ahead lies the UK CBI Retailing survey, South African PPI, US weekly jobless claims, Goods Trade Balance and Pending Home Sales, and Canada’s CFIB Business Barometer. Another busy day for ECB speakers accompanies the publication of the ECB monthly Bulletin, while rates are expected to hold in Turkey (50.0%) and cut by 50 bps in Ukraine (14.0%). A bumper day for corporate earnings worldwide follows the major disappointment of yesterday’s Meta earnings, with highlights in Asia including Chalco, CNOOC, Jiangxi Copper, POSCO, Reneseas, SK Hynix, TCL Zhonghuan Renewable Energy, while Europe looks to Barclays, BASF, BNP Paribas, Deutsche Bank, Equinor, ST Microelectronics and TechnipFMC. Across the pond, the focus will likely be on Altria, Caterpillar, Dow, GE Vernova, Hess, Intel, Laboratory Corp of America, Merck & Co, Newmont, Union Pacific, Valero Energy and Western Digital. In respect of the Meta earnings, there was always going to be a point at which the AI frenzy was going to be confronted with investors reassessing whether colossal AI expenditures are/will generate better profits, not only for tech behemoths but more rapidly, whether this is that inflection point remains to be seen, but a more critical thinking approach has certainly become overdue.

* U.S.A. *
Advance Q1 GDP is expected to slow to 2.5% SAAR, from Q4’s 3.5% and H2 2023’s 4.2%, but remaining well above the Fed’s assumed potential rate of 1.8%. Solid if somewhat slower Personal Consumption at 2.5% vs. prior 3.3%, and strength in Housing investment are expected to offset a drag from Net Exports, while Business Investment will likely be mixed, with strength in Intellectual Property Products (aka IPP) offsetting sluggish Equipment and Structures CapEx, and ever present wild card of Inventories expected to be largely flat. If forecasts are correct, then this would reinforce Fed caution on rates, along with the likely sideways to slightly higher trend in tomorrow’s monthly PCE deflators.