US wholesale inflation cooling, but weekly jobless claims hit 1-1/2-year high (4 min read)
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The wholesale inflation in the US continues to cool in April as the Producer Price Index (PPI) came in at 2.3% annually, a drop from the 2.7% in March and the smallest rise since Jan 2021. However, the number of Americans filing for jobless claims rose to a 1-1/2-year high, indicating weakness emerging in the labor market and a potential slowdown in businesses. While the PPI data may be another reason for the Fed to pause rate hikes next month, there are concerns that the economy could face a recession, which partially led to stocks sliding on Thursday.

China’s Weak Inflation, Borrowing Show Economic Recovery Waning (3 min read)
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China's consumer prices barely grew in April, at a two-year low of 0.1%, and wholesale prices fell into deflation, dropping 3.6%. Credit and new loans in China were worse than expected in April, reflecting reduced borrowing by consumers and businesses. China’s economic growth accelerated in Q1 after lifting pandemic lockdowns, but recent data, including manufacturing activity, are all pointing to a contraction. This raises the expectation of more government stimulus, potentially policy easing in Q2 to support post-Covid recovery.

PacWest shares tumble 20% after regional bank says deposits fell 9.5% last week (2 min read)
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The US banking chaos continues as PacWest lost another 20% in value after the bank said deposit outflows resumed in the first week of May. Its deposits declined 9.5% in a week and a majority of it came after media reports the bank was exploring strategic options. Some analysts speculate that the outflows were from their venture capital customers, and if that were true, then it would be better news than outflows from the core bank customers. PacWest said they now have $15 billion of available liquidity and reassured the ability to fund those withdrawals.

Toyota plans big electric vehicle push in China (3 min read)
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Toyota’s new CEO, Koji Sato, has promised to accelerate its EV push in China as it forecasts a 10% increase in annual operating profit to $22 billion, the highest for a Japanese company. The shift to EVs in China is fast and Toyota plans on aggressively capturing that demand. Koji said the company is now ready to produce a record number of vehicles this year after various measures were taken to address the chip shortage. He also said Toyota’s annual global sales of EVs would probably rise from 38,000 units last year to 202,000 units.

IPO ETFs Back in Focus as Public Offerings Attract 90% More This Year (3 min read)
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US initial public offerings (IPOs) have sharply rebounded this year, raising about $6.7 billion so far, a 90% increase from the previous year. A bulk of this number came from Johnson & Johnson’s consumer health spinoff, Kenvue, where it raised $3.8 billion and gained over 22% last week. IPO ETF is a way to gain exposure to the potential windfall of these IPOs as they buy shares of these companies shortly after they begin to trade. Two notable IPO ETFs currently are the First Trust U.S. Equity Opportunities ETF (FPX) and Renaissance IPO ETF (IPO).

What the debt ceiling standoff means for money market funds (2 min read)
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With the US debt ceiling approaching, many are concerned that money market funds will fall in value and break the buck. But experts said that would be rare and less of an issue for larger institutions like Vanguard or Fidelity because these companies have the money available to support their funds. These funds are also investing in a range of assets with staggered maturities, so they are constantly rolling over securities. Although its yield will drop when the Fed begins to cut rates, the 5% payout now is still an attractive low-risk return in the meantime.

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Thanks,
Thomas

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