Debt Limit Bill Heads To Senate To Be Rejected

House passed a bill to increase debt "ceiling" by $1.5 TRILLION. Almost zero chance it passes through Senate. 

So, will the U.S. default on its debt? 

In 230 years, America has never defaulted on its debt aside from Nixon, FDR, Lincoln.

Market

Prices as of 4 pm EST, 4/26/23

Macro

Speaker Kevin McCarthy passed his debt limit bill through the House yesterday…barely.

• The vote was 217-215 in favor, with all Democrats (and four Republicans) opposing the measures.

• The bill now heads to the Democratic-controlled Senate where it has virtually no chance of passing.

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Federal prosecutors believe Jack Teixeira—the Massachusetts guardsman charged with leaking highly-classified intelligence documents—may still have access to sensitive material.

• He is accused of attempting to cover up his tracks by destroying computer equipment, urging others to delete messages, and instructing them not to talk to investigators.

• Authorities also say they found a cache of weapons at two homes used by Teixeira, which included handguns, rifles, shotguns, an AK-style high-capacity weapon, and a literal bazooka.

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Orders for US durable goods jumped by 3.2% in March, easily topping market expectations of a 0.7% increase.

• Much of that gain, however, is attributable to a surge in new contracts for passenger planes.

• Stripping out transportation, core goods rose by just 0.3% in March and posted the slowest annual gain in over 3 years.

• Meanwhile, business investment (red) fell for the 4th time in 5 months and points to a slowing economy.

Stocks

On their way to fresh all-time lows, shares of First Republic Bank were halted several times over the last 2 sessions.

• The lender has floated a new rescue plan to the 11 banks which rescued it in the first place.

• The plan involves selling them new loans or stock (or both) above market value.

• If that sounds like a bad deal for the banks, that’s because it is - First Republic advisers are still exploring other options to keep it from failing.

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Disney has sued Florida Governor Ron DeSantis, accusing him of retaliation for criticizing legislation he backed.

• The suit alleges Florida violated federal constitutional rights protecting contracts, due process under law, and free speech.

• The move comes after a DeSantis-approved board reversed a last-minute development agreement that gave Disney unusual control over the land near its theme parks.

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JPMorgan has created an AI model to decipher trading signals from Fed statements and speeches.

• It uses ChatGPT-based language to assign policy messaging a ‘Hawk-Dove Score’.

• According to the model, Fed speeches and FOMC statements have been decidedly hawkish in recent months.

Energy

US crude oil prices fell to their lowest level since late March yesterday despite a bullish drop in US stockpiles.

• Markets also ignored a 4th straight weekly draw from the Strategic Petroleum Reserves by the White House.

• Meanwhile, the oil-to-gold ratio is trending higher which suggests investors are positioning for a recession.

Earnings

Here are some of yesterday’s highlights:

Meta META: $2.20 EPS (vs. $2.03 expected), $28.65 billion in sales (vs. $27.65B expected).

• Despite a 24% YoY drop in net income, sales grew (3%) for the first time in 4 quarters.

• The company’s guidance for current-quarter revenue also exceeded analysts’ expectations.

Boeing BA: -$1.27 EPS (vs. -$1.07 expected), $17.92 billion in sales (vs. $17.57B expected).

• The company narrowed its losses as sales increased 28% YoY.

• It also expects to boost its production rate to the highest in years with an increase in output of 737 Max planes to 38 from 31.

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What we’re watching today:

• Amazon AMZN

• Eli Lilly LLY

• Mastercard MA

• Merck MRK

• Abbvie ABBV

• AstraZeneca AZN

• Linde LIN

• T-Mobile TMUS

• Comcast CMCSA

• TotalEnergies TTE

• Bristol-Meyers Squibb BMY

• Sanofi SNY

• Unilever UL

• Honeywell HON

• Amgen AMGN

• Intel INTC

• Caterpillar CAT

• S&P Global SPGI

• Gilead Sciences GILD

• Mondelez MDLZ

• Altria MO

• Southern Company SO

• Activision Blizzard ATVI

• Hershey HSY

Top Headlines

• Corporate cuts: The largest meat supplier in the US, Tyson Foods, will cut 10% of its corporate jobs

• AI vs. patents: AI-fueled inventions pose a challenge to the US patent system.

• Summers: Former US Treasury Secretary Larry Summers says the US won’t achieve 2% inflation without a recession.

• Tucker speaks: Tucker Carlson broke the silence following his Fox firing in a Twitter video.

• Profit streak: Deutsche Bank reported its 11th consecutive quarter of net profits.

• Stepping down: Bristol-Meyers CEO Giovanni Cafori will retire after 8 years of leading the company.

• Content rules: Twitter could face penalties of up to 6% of annual revenue if it doesn’t comply with EU content-moderation rules.

• SanFran CRE: A 30% vacancy rate has led to an 80% drop in value for San Francisco office space.

Crypto

Prices as of 4 pm EST, 4/26/23

• BTC vol: Bitcoin volatility led to $175 million in liquidations and $1 billion in open interest wiped out.

• DEX: Decentralized exchange Uniswap has surpassed $1.5 trillion in trading volume.

• Compliance: Over the last 2 years, Binance has increased the number of employees dedicated to compliance by 650%.

• Hong Kong: Guidelines for crypto exchanges looking to launch in Hong Kong are set to be released next month.

• Leverage: The use of leverage in the Bitcoin market has hit its lowest level since December 2021.

Deals

• Mining: Teck Resources scrapped a restructuring vote to spin off its coal assets.

• Upper hand: Meanwhile, Glencore says its takeover bid for Teck Resources still stands.

• Rejected: UK regulators have blocked Microsoft’s $75 billion acquisition of Activision Blizzard over competition concerns.

• Telecom: Iliad SA and Vodafone have revived talks on a deal for the latter’s European operations.

• Debt restructurings: To avoid bankruptcy proceedings, distressed US companies are turning to out-of-court distressed exchanges.