Iran rejects U.S. war proposal, says no talks before conditions met
The U.S. dollar remains super strong, and that should help U.S. financial markets be much more resilient. Since gold is priced in U.S. dollars, I am expecting gold to reemerge as an oasis for nervous investors. Due to an acute shortage of fertilizers due to shipping complications, there is an impending fear of possible food shortages.
Meanwhile, the International Energy Agency on Tuesday proposed the largest release of oil reserves in its history of 400 million barrels to alleviate the crude oil shortage due to the problems with the Strait of Hormuz. Bloomberg reported on Wednesday that Germany and Japan will be tapping their strategic crude oil reserves in the upcoming days.
Speaking of nervous investors, BlackRock has limited withdrawals from one of its flagship private credit funds after a surge of redemption requests. Specifically, the $26 billion HPS Corporate Lending Fund received $1.2 billion in withdrawal requests in the first quarter and will allow $620 million redemptions, which represents 5% of the fund. As the panic in private credit spreads, it will drag the Fed into fixing this mess with further key interest rate cuts, since it will impede lending and curtail economic growth.
The February CPI is good news for the future key interest rate cuts, especially if the job market remains weak. The Labor Department announced on Wednesday that the consumer price index (CPI) rose 0.3% in February and 2.4% in the past 12 months. Both the CPI and core CPI were in line with economists’ consensus expectations. The good news is that shelter costs (owners’ equivalent rent) rose only 0.2% in February. Since shelter costs have rose 3% in the past 12 months, they have been one of the primary sources of CPI inflation but now appear to be cooling off fast.
The good news is that Nvidia will be hosting a GPU Tech Conference next week that is expected to provide insight into its next-generation chip architecture and helped semiconductor and memory stocks rally this week. Additionally, this conference is also expected to highlight optical connections, which should bode well for Ciena (CIEN), Corning (GPW), and Ubiquiti (UI).
