Morning wrap (08.02.2024)

• Wall Street indexes closed the session with solid gains yesterday. The S&P 500 crossed the psychological level of 5,000 points for the first time ever. The upward momentum continued until the end of the session, with the index gaining 0.82%. The Nasdaq100 rose by 1.04%. The Dow Jones was slightly weaker, gaining 0.4%. 
• China's CPI inflation turned out to be lower than expected in January, raising concerns about deflation and a downturn in the economy. CPI fell -0.8% y/y vs. -0.5% forecast and -0.3% in December (m/m rose 0.3% vs. 0.1% previously). Core CPI inflation rose 0.4% vs. 0.6% in the previous reading; food prices fell 5.9% y/y.
• Sentiment in Asia was mostly upbeat, except for China, where the Hang Seng slid 1.45% and slipped back below the 16,000-point level.
• Japan's Nikkei index gained more than 2%, while the benchmark Topix gained nearly 0.5%. Korea's KOSPI erased much of the gains and closed the session flat
• Collins of the Fed stressed that it is still likely that long-term interest rates will be higher than they were before the pandemic, signaling that policy easing by the Federal Reserve will be limited.
• The Fed's Barkin pointed to considerable uncertainty about the trajectory of inflation, but stressed that it would probably not take much damage to the economy to bring it down to 2%

The U.S. Congressional Budget Office issued a new set of economic forecasts and indicated that it lowered 10-year deficit projections, mainly due to a reduction in discretionary spending in 2023, stronger GDP and employment growth than previously forecast.

• Unemployment rate in the last quarter of the year at 4.4% in 2024-2026 after 3.7% in 2023.
• U.S. real GDP growth of 1.5% in 2024, 2.2% in 2025 and 2026 after 3.1% growth in 2023, Q4 vs Q4.
• Core PCE inflation at 2.4% in 2024, 2.3% in 2025 after 3.2% in 2023.
• U.S. net interest costs will be 3.1% of GDP in 2024 vs. 2.4% in 2023, rising to 3.9% in 2034.
• U.S. government debt will rise to 116% of GDP at the end of 2034 from 97.3% at the end of 2023.
• US deficit in 2024 at $1.507 trillion vs. deficit in 2023 at $1.695 trillion.
• Cumulative U.S. deficit in 2025-2034 at $20.016 trillion, compared to a previous deficit in 2024-2033 of $20.314 trillion.    

• Despite weaker-than-forecast results, Disney shares gain nearly 7% ahead of the U.S. open, supported by comments on profitability and the start of a crackdown on password sharing, later in the year
• PayPal loses 8% after quarterly financial results; company beat expectations, but disappointed on annual earnings per share forecast and expects flat revenue in 2024
• EURUSD is trading up 0.15%, with considerable volatility in currency pairs linked to the Japanese yen, which is weakening; USDJPY gains 0.42%
• Oil is trading up a modest 0.2%, natural gas contracts are losing around 0.5%. Gold contracts lose 0.1% against a near 0.65% rally in silver
• Bitcoin gains 0.8% today and is trading near $44,500. According to cryptocurrency market observers, the rapid rise from the $43,000 level yesterday can be linked to the tense situation of the US regional banking sector, although New York Community Bancorp (NYCB.US) shares managed to rebound yesterday after nearly 12% declines during the session and closed the session at 7% plus