Stocks mixed as First Republic knocks on death's door but Microsoft keeps the bid in tech

-Sky deal The FRC is in deeper trouble, Microsoft had a stellar report, durable goods beat expectations, the trade deficit narrowed, McCarthy got the GOP behind a debt ceiling bill, there was a decent 5 year auction, Amazon is laying off people, and the UK CMA rejected the Microsoft-Sky deal.


: Equities mixed, Treasuries down, Crude down, Dollar down


FRC's woes worsen; stellar MSFT report, Durable Goods headline beat and trade deficit shrinks; McCarthy convinces GOP to support debt ceiling bill; decent 5yr auctions; Amazon layoffs. UK CMA rejects MSFT's acquisition of ATVI. Riksbank raises interest rates by 50bps.

Coming Soon


The following are some of the most effective ways to reduce your risk.

: Chinese Industrial Profit, US GDP & PCE Prices Advance

The Event

CBRT Policy Announcement


: ECB's Panetta

Buy Now

: Italy, US Earnings: Delivery Hero, Hellofresh, STMicroelectronics, Deutsche Bank, TotalEnergies, Carlsberg, Sanofi, BASF, AstraZeneca, Unilever, LSE, Barclays; Amazon, AbbVie Exxon, Mastercard, Linde, Lilly, T-Mobile, Altria.

Estimates of US Earnings Weekly

Download the report.

Please click here


Click to view the full-size image

Market Wrap

Why not try Newsquawk?

Squawk Box

Free for 7 Days?


The initial MSFT/GOOGL rally that was triggered by earnings failed to hold. However, Nasdaq managed to maintain gains. MSFT earnings boosted the tech and cloud sectors. But the initial Google stock rally (GOOGL), which had been very strong, was reduced and the focus shifted to META's earnings after hours (which were also very good). The stock market moved away from its highs due to renewed FRC woes. After a 50% drop on Tuesday and another 30% loss on Wednesday, the bank was deemed to be too small to survive by regulators. The initial news saw dollar and equity selling, while bond buying was seen. However, bonds were later reversed, with yields reaching session highs. This lifted DXY from its lows. The FRC fiasco is rife but earnings from PacWest, (PACW), offered some relief. The bank posted strong earnings and healthy deposits. The data on Wednesday showed a positive headline for durable goods, although this was mostly due to a surge in aircraft orders. The international trade data revealed a smaller deficit. The focus will also be on the debt ceiling vote, after McCarthy was able to secure enough GOP support to allow a vote to take place on Wednesday. Senior Republicans are confident that it will pass in the House, but will die on arrival in Senate.



First Republic's (FRC) share price fell another 30% on Wednesday after a 50% drop on Tuesday, due to a series of continuing worrying reports. CNBC's Faber reported that sources indicate the White House and Treasury continue to be unwilling to increase pressure on banks to buy First Republic assets in order to repair their balance sheet. Bloomberg reported on the FRC being restricted from borrowing money from the Fed and that FDIC is considering lowering Bank ratings if no deal is reached.

Durable Goods

After two consecutive months of declines, March saw a USD 2.9bln increase or 1.1% in shipments to USD 277bln. Transport orders surged by 55.6%, which boosted the headlines and shipments. The rest of the figures were not impressive. Nondefense ex-air declined by 0.4%. This was more than the minus 0.1% expected. Oxford Economics states that 'Durable Goods activity is particularly sensitive to credit conditions. We think that increasing restrictive lending standards and relative high interest rates are going to lead businesses and consumers back to spending. Oxford Economics notes that 'tighter lending conditions will hit activity with a delay, so we expect to see the most damage in H2 of 2023 and early-2024.

International Trade

The US International Trade Deficit in March fell to USD 84.6bln, down from USD 91.99bln. Exports increased by USD 4.9bln and reached USD 127.7bln. Imports decreased by USD 2.5bln at USD 257.3bln. Wholesale inventories at the end of the month were USD 919.9bln. This was a +0.1% M/M, and a +9.3% year-over-year increase. Retail inventories were estimated at USD 773.4bln or +8.4% YoY, up +0.7% month-on-month. Analysts from Pantheon Macroeconomics point out that the decline in deficit is due to an increase of 2.3% in industrial supplies exports, including oil. The desk also adds that spread between WTI Brent indicates a shrinking in the months to come. PM noted that the net trade in Q1 will have a broadly neutral effect on GDP. The Atlanta Fed GDP Tracker predicts GDP growth of 1.1% for Thursday. This is down from 2.5% in Q1 and below the current GDP consensus. Analyst forecasts range from 0.3-3.3%.


The House is now voting on the bill at 21:30-22:00 BST tonight, after receiving more support on the debt ceiling issue from House Republicans. The senior republicans are happy that the bill passed today. If this were to happen, the bill would then be sent to a Democratic-controlled Senate where it will likely die on arrival. McCarthy hopes that the passage of the bill by the GOP-controlled house will help him in his negotiations with Democrats. Even if the bill passed the Senate, which is unlikely, the White House said that US President Biden would veto the bill. Pimco CIO Ivascyn believes that a US default is unlikely. However, he said there will be a lot more back and forth negotiation and, if the US Debt Ceiling issue persists, this could increase the risk of an even harder landing.

Fixed Income


Treasuries fell Wednesday as the sentiment around First Republic shook.

At settlement: 2s -2.2bps, 3s -2.0bps, 5s -2.6bps, 7s -2.7%, 3.448%; 10s -2.6%, 3.424%; 20s -3.806% and 30s -3.691%.

Inflation breakevens

5yr BEI at 2.275% -1.1bps, 10yr BEI at 2.266% +0.4bps, 30yr BEI at 2.240% +0.7bps


After PacWest (PACW), reported good earnings on Tuesday evening, First Republic's (FRC) anxiety dissipated and T-Notes sold at their Tuesday peaks of (115-30) in the APAC session Wednesday. The 115-19 was a support. In the APAC session, the CPI in Australia fell less than expected.


There was a brief strength when London trading began, and again as NY arrived in order to push contracts up to the interim resistance of 115-27. CNBC reported that FRC advisors had lined up potential buyers of new stock. T-Notes fell to 115-13+, led by the front end. The government bonds were only temporarily weaker, as the contracts were quickly reduced and durable goods orders data was strong. T-Notes then went on to reach session highs of 115-30+ in the morning hours after the CNBC report that Treasury and White House are not willing to increase pressure on banks for First Republic assets. This was a false breakout by the govvies, and the better selling continued into the NY afternoon as bank shares stabilized and the auction for 5 years approached. T-Notes reached session lows of 115-10, before the good auction helped to cap the losses. Treasuries also settled at lower levels after the recent First Republic update. The report stated that the FDIC may consider lowering the rating of Treasuries if an agreement is not reached.


The auction for the USD 43bln 5-year bond was decent. However, it is worth noting that the health concession made the day before the auction likely benefited the offering. The auction was stopped by the WI at 0.6bps. This is in line the average of six auctions, and represents a auction stop of 3.500%, the lowest auction stop since August 2022. This compares with March's stop-through of 1bp for a stop of 3.665%. The 2.48x ratio of bid/cover was higher than the previous 2.48x, and 2.49x on average. Dealers (forced excess buyers) had 13.6% left, which was in line with average and 0.3ppts more than before. This was due to the M/M decline in Directs participation, which more than offset the M/M increase in Indirects.

This Week's Auctions

US will sell USD 42bln in 2yr bills on the 25th of April, USD 43bln in 5yr bills on the 26th of April, and USD35bln in 7yr bills on the 27th of April. All of this is to be settled on May 1.

This week, the US will be celebrating Thanksgiving.

(Thurs) GDP (Gross Domestic Product), pending home sales (pending home sales), KC Fed Index, 7yr Auction, AMZN (Amazon) (Fri), ECI (Exchange Commodity Exchange), Chicago PMI (Chicago PMI), UoM (UoM Final).

This week, the world will be experiencing a global event.

(Thurs) CBRT, (Fri), BoJ, Tokyo, GDP EZ.



SR3H3 +0.5bps at 95.090, M3 -1.5bps at 94.985, U3 -1.5bps at 95.300, Z3 -1.0bps at 95.735, H4 -2.0bps at 96.235, M4 -3.5bps at 96.660, U4 -5.5bps at 96.945, Z4 -6.5bps at 97.095, H5 -6.5bps at 97.165, H6 -3.5bps at 97.195.

Volumes at USD 1.329tln. 1.298tln).

Demand for NY Fed RRP Ops at USD 2,280tln. (Prev. Demand for NY Fed RRP op at USD 2.280tln (prev. 100).

Volumes at USD 112bln, EFFR at US flat at 4.83 % (prev. 110bln).

US sold USD 36bln (17-week bills) at 4.975%; covered 2.85x. US sold USD 24bln (2yr FRNs) at a high margin of discount of 0.169%; covered 3.04x.



The crude complex fell on Wednesday and settled at lows due to increased Russian refinery operations, FRC problems, as well as possible recessionary concerns outweighing the large US EIA stock draw.

Brent crude also erased all gains since the surprise OPEC+ cut in production. The price levels above pre-OPEC cuts have been providing support recently, so a break below those key technical levels could have exasperated downside. Enphase Energy's (ENPH) shares fell after it missed its revenue guidance for Q2, while Hess' (HES) earnings rose. Hess expects the Q2 oil and natural gas production to average between 355k BPD to 365k BPD, due to maintenance planned at Liza Phase-2, US Gulf of Mexico, Southeast Asia, and Bakken. Iraq's government spokesperson also said that Iraq was in talks with Turkish oil traders to resume oil supplies, but "technical issues" are holding up oil flow from Turkey. On Wednesday, the macro-tone was risk-off (extech). This also weighed on crude. Tighter credit conditions fears also have an impact on the demand side as First Republic (FRC), which is on the verge of death, knocks at the door.


Distillates were slightly smaller than expected in the EIA weekly data and fitting with private inventories Tuesday night. Crude production dropped by 100k, to 2.2mln. Refining usage was 0.3% as expected.


Deputy Russian PM Novak stated that the total balance between oil supply and demand had not changed. He added that there were risks to energy security if OPEC+ was not present. OPEC+ does not regulate prices, and it can be difficult to come to an agreement between all countries. Separately according to Reuters calculations, and sources, Russian refineries increased their runs by more than 1% between January-March 2023 Y/Y. Oil refinery runs increased by 10% in March 2023 and so far in April Y/Y.



: SPX -0.38% at 4,056, NDX +0.64% at 12,806, DJIA -0.68% at 33,301, RUT -0.89% at 1,730.


Utilities -2.37 %, Industrials -1.87 %, Health -1.41 %, Energy -12.28 %, Materials -11.18 %), Financials -9.66 pct, Real Estate -8.83 pct, Consumer Staples -7.74 pct, Communication Services -6.62 ppct, Consumer Discretionary 0.38% ppct, Technology +1.73%


: Euro Stoxx 50 -0.69% at 4,347, FTSE 100 -0.49% at 7,852, DAX 40 -0.48% at 15,795, CAC 40 -0.86% at 7,466, FTSE MIB -0.54% at 27,107, IBEX 35 +0.04% at 9,293, SMI -1.29% at 11,365.



Microsoft (MSFT),

Cloud segment beats on revenue, EPS and cloud segments. Cloud demand is fueled by renewals of deals and the company has seen a good demand for AI products. Teams usage reached a record high of 300mln MAUs, with over 2,500 Azure customers using OpenAI.

Alphabet (GOOGL)

Wall Street consensus on EPS and revenue. St consensus for EPS and revenue. Authorized a repurchase of up to USD 70bln additional shares. There were signs of stabilisation for YouTube ads, but there was a slight pullback on advertiser spending. Exec stated that the outlook is uncertain because of the difficult environment.

Boeing (BA)

The company posted a larger loss per share, but surpassed revenue. In terms of production increases, the company said that it would prioritize stability, and not push too quickly. Certification timelines for 737-7s, 737-10s, or 777Xs haven't changed. The 737 delivery rate will increase to 40 jets a month in H2 of '23.

Enphase Energy (ENPH)

The Q2 revenue guidance was too short. US revenue declined due to seasonality, macro-economic conditions and macro-environmental factors.

Chipotle Mexican Grill

The top-line and bottom-line results exceeded expectations, with a strong growth in same-store sales despite an increase in menu prices.

Visa (V)

The company ranked first in terms of revenue and EPS, while the payment volume was also impressive.

PacWest Bancorp

Beat on profits and noted that deposits stabilized in March and recovered in April. Total deposits USD +1.1bln, to 28.2bln.


CMA prevented

Microsoft's (MSFT)

Acquisition of

Activision (ATVI).

Concerns that the deal could alter the future of cloud gaming, which is a fast-growing industry. ATVI published its earnings on Thursday and beat both the top and bottom lines. It added that CMA's report did not reflect reality and that we would work with Microsoft to appeal.

Alibaba (BABA),

China's Securities Times reports that the company has cut prices by up to 50 percent for storage and core products. The price cuts are intended to increase market penetration and expand user base.

Teck Resources (TECK)

The separation proposal was withdrawn, according to reports

Glencore's (GLEN LN)

Rejected proposals are still non-starters. TECK intends to pursue a'simpler and more direct separation, and is ramping its flagship QB2 project up to full production.

Amazon Web Services (AMZN).

On Wednesday, CEO announced that it would be laying off workers in its cloud division.

Disney (DIS)

The company filed a suit in Florida against Ron DeSantis, and the oversight board. It noted that it had been "forced to defend themselves against a state using its power to inflict a political punishment". Variety reports that Disney Streaming Chief Product Officer, who was one of the architects behind Disney+, had been laid off as part of the latest round of layoffs at the media conglomerate. The Minas Gerais State Prosecutors have sued the company.

AngloGold Ashanti (AU)

over tailings dam safety.

Netflix (NFLX).

NY Post, citing Kantar statistics, reported that 1mln users had been lost since the crackdown on Spain in the first three month of 2023.


The Dollar

DXY found support at 101 on Wednesday, presumably due to First Republic's (FRC) fears that it is too small to last. FRC's failure would tighten credit and could take some pressure off the Fed to fight inflation. The markets now expect a 40bps rate cut this year, compared to 20bps in the beginning of the week. DXY fell to 101.00 after reports that FRC would not receive any help from regulators. However, it bounced back to 101.50 when yields recovered from their lows. The headline durable goods data was above analyst expectations, but the ex-air version dropped more than expected. This shows that Aircraft performed a large part of the heavy lifting during March. International Trade data showed a smaller deficit. The March data is released ahead of the GDP release on Thursday. While the street expects a 2.0% gain in Q1, the Atlanta Fed GDP Tracker has downgraded its view from today's 2.5% to just 1.1%.

The Euro

The Euro/Dollar was stronger thanks to a weaker dollar. EUR/USD attempted to rise above 1,11, but reached a high 1.1095. De Guindos, ECB, said that the labour market was impressive and that the ECB would have to consider the tightening financial conditions as reported in the Bank Lending Survey. He also noted that wages will accelerate. Heredotou, ECB's Heredotou, said that wage growth was a major challenge and must be closely monitored. They are also beginning to see signs of the impact of rate increases on the economy.

The Yen

The market was very choppy. USD/JPY began the day stronger, but after the First Republic debacle (FRC), the dollar was sold and Yen bid, taking it to lows as low as 133.02, before paring most of the move in the afternoon, when US yields moved higher. Gold prices also failed to hold on to their initial gains as yields rose.

Cyclical currencies

The US session ended with mixed results. GBP was the best performer, while Aussie and NZD were both down. However, NZD again outperformed Aussie despite the Antipodean data. The Australian CPI was higher than expected. Q1 CPI came in at 1.4% Q/Q, compared to the expectation of 1.4%. The Q1 CPI was 1.4% Q/Q (exp. The 6.9% decrease is a drop from the 7.8% that was previously recorded. NZD's trade data showed a widening deficit. CAD only slightly weaker despite oil returning to levels before OPEC production cuts, while the BoC Minutes largely repeated the MPR and Press Conference.


SEK was underperforming compared to the Euro, with NOK following its lead from lower Brent prices. As expected, the Central Bank increased by 50bps. However, the guidance was more dovish and suggested that another hike may come in September or June instead of the consensus expectation for another in June. Two dovish dissenters opted for a hike of 25bp, Floden & Bremen.


BRL, despite the dollar's weakness, was relatively flat. Inflation data, which fell in line expectations, was 0.6% M/M. The Y/Y rate also declined, to 4.2%, from 5.4%, in March. Pantheon Macroeconomics analysts note that the inflation situation continues to improve due to favorable base effects, a lagged effect from interest rates and softer demand. MXN fell on lower oil costs and comments from Banxico about a possible pause. COP suffered from a cabinet reshuffle while CLP outperformed despite the flat copper price and the Chilean Peso's benefiting from the weaker Dollar. ZAR fell marginally as gold lost its gains, and South African PPI numbers were cooler than expected.