Highlights: The US stock markets remained mostly flat on Monday as investors await key inflation indicators this week. The CPI and PPI for March, which will be out on Wednesday and Thursday, respectively, could reveal how likely or soon the Fed will stop or slow its rate increases.

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Yen slides as new Bank of Japan governor sticks to ultra-loose policy (3 min read)
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The new governor of the Bank of Japan, Kazuo Ueda, announced that he will keep the bank's ultra-loose monetary policy for now, which includes negative interest rates and yield curve control implemented by his predecessor. Despite holding the policy in place, he also acknowledged Japan needs to get closer to its 2% inflation goal. The yen fell about 1% against the US dollar after the news. Investors had anticipated that Ueda would move away from limiting long-term government borrowing costs in response to the country’s high inflation rate.

Billionaire investor Barry Sternlicht says inflation is going to ‘drop hard’—just look at rents (3 min read)
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According to Barry Sternlicht, a billionaire investor and the CEO of Starwood Capital, inflation will decline sharply due to lower rents. He said that the government's method of reporting rental data causes a delay, which inflates the consumer price index (CPI). He pointed out that shelter makes up one-third of CPI, which will reduce headline inflation if adjusted. Sternlicht expects inflation to drop by late summer or early fall this year, but he also warns that the country is going into a severe recession.

Microsoft’s $13 billion bet on OpenAI carries huge potential along with plenty of uncertainty (7 min read)
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Microsoft's $13 billion investment in OpenAI is becoming a hot topic of discussion. Startups and large corporations are rushing to integrate OpenAI's products into their services, leading to massive workloads running on Microsoft's cloud servers. Analysts suggest that the collaboration could generate over $30 billion in new annual revenue for Microsoft. However, the financial implications are complicated as OpenAI operates a capped-profit structure, where early investors are limited in their returns. Critics are also rising, questioning the system and Microsoft's ownership.

Global PC shipments slide in first quarter, Apple takes biggest hit, IDC says (2 min read)

According to two market research firms, global PC shipments shrank by 29% to 33% in the first quarter of 2023. The decline was due to low consumer demand, high inventory levels, and a gloomy economic outlook. Apple suffered the biggest drop, falling by more than 40%, followed by Dell, Lenovo, Asustek Computer, and HP. However, both firms suggest the market could begin to recover later this year and gather momentum in 2024. Some analysts, on the other hand, are less optimistic, given ongoing issues in the banking sector and inflation concerns.

Gundlach's DoubleLine Launches 2 Real Estate ETFs (3 min read)
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DoubleLine Capital has launched two new active ETFs, the DoubleLine Commercial Real Estate ETF (DCMB) and the DoubleLine Mortgage ETF (DMBS), despite the current tumultuous state of the real estate market. DCMB will invest in investment-grade mortgage-backed securities, while DMBS will focus on a portfolio of residential mortgage-backed securities. Jeffrey Gundlach will serve as the portfolio manager for both funds, and the firm also emphasized its expertise in the commercial real estate and mortgage market.

TLT: The Case for Stability (4 min read)
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Rising interest rates, especially in the US, have been a huge drag on the global economy. However, there are signs that US rate hikes could end or pause soon after several alarming narratives in Q1. Investors can participate in this change by investing in ETFs such as the iShares 20+ Year Treasury Bond ETF (TLT), which reflects long-dated US interest rates; it rises when rates fall and vice-versa. Despite a rough 2022, TLT has gained 6.8% in the first quarter of 2023, with inflows of $7 billion in the past three months, implying a bullish sign for TLT.

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Thomas

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