Our Daily Notes

05/15/2024 11:15 MSCI (The largest companies in terms of market value and liquidity) World index is at record levels… The main point of our thoughts for the market this month was the increase in “volatility”. This has not happened much so far. The market continues to see the glass half full. Yesterday, the April PPI data was announced in the US. Although both headline and core monthly changes were above market expectations, the relative improvement in the items included in the PCE (INFLATION) data (such as health care and transportation) was the first development that increased risk appetite in the market. The second development that increased risk appetite was Powell's speech in Amsterdam. Although there was uncertainty about the “timing” as he emphasized that monetary policy was tight and presented a structure summarizing that the first change would be “discount”, it did not contain “a hawkishness that would scare the market”. An ECB member also spoke in the same panel. We are also approaching the interest rate reduction process on the ECB side. The theme of synchronized interest rate reductions for the second half of the year is decisive in pricing. However, not every announced data progresses parallel to this theme. We will better understand the “reality” of this theme in the May-June period. “Logically” volatility should increase by then. However, it did not increase in the first half of May. The S&P 500 index closed very close to the “record level” with a 0.5% premium yesterday. We are at a record in the MSCI World Index (ACWI). ACWI was also at a record in March and experienced a “correction” with the increase in long-term bond yields and an increase in geopolitical risks. Although the US 10-year yields have decreased from 4.7% to 4.4%, more severe pullbacks are needed for the “stock rally” to continue breathlessly. We are above the median figure of institutions that entered estimates for the end of 2024 in Bloomberg in mid-April. Either Earnings Per Share will improve or the discount rate will decrease. The economic data announced in the current month highlight the slowdown in the US more. Top discount rate… Although stock reactions to good balance sheets are weaker than in previous periods, Q1 figures are not bad. However, the main reason for not being bad is mega-capital technology stocks. There are also divergences in the artificial intelligence theme. Not every AI stock did well after its balance sheet. When we look at the sector performances of the last month in the S&P 500, the best are the mandatory consumption and infrastructure sectors… Under normal conditions, we should say “defensive structure”. There is also a very clear divergence in “real estate” and “infrastructure”, two sectors that are highly sensitive to bond yields. These two sectors “generally” exhibit a parallel performance depending on the movement of 10-year yields. While infrastructure soared, real estate lagged behind. 10-year yields are having difficulty falling below 4.4%. The US April CPI data will be closely followed at 15:30 Turkish time today. Cisco will also announce its figures after the session. If we see a bad CPI today and a bad Cisco stock price after the session, the week will close very differently than yesterday… The annual change for Core CPI is expected to be the lowest in the last three years. In EURUSD, we saw a close above the 200-Day Moving Average for the first time since April yesterday. Today, it is also trading above the 100-Day Moving Average. Brent oil is below $83. Gold and silver are slightly premium. . If we see a close above $28.9 ounce in silver, the rise rate will “technically” increase even more. While risk appetite is good in stock markets and investor demand for meme stocks is increasing, why can’t Bitcoin “clearly” break the $60k-$62.5k range? This Issue Causes Serious Confusion.