US retail sales signal weak rebound and sticky inflation

Good morning. Here's what happened overnight and what you need to know today.

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1.

Unwelcome numbers: US retail sales for February came in lower than expected after a deeper pullback in January, adding to concerns about the strength of consumer spending. The US Census Bureau’s figures for February saw retail sales rise 0.6%, after falling a revised 1.1% (from 0.8%) in January. While sales were up across eight out of 13 categories during February, sales across furniture, grocery, clothing and online retailers remained down. US Producer Prices for February also came in higher than expected on Thursday, seeing an increase of 0.6% from January and up 1.6% from a year earlier. The figures were driven by higher food and fuel costs, and underscore signs of persistent inflation, adding to expectations that the US Federal Reserve will hold rates steady for a fifth consecutive meeting when it meets next week. (US Census Bureau Retail Sales data)(Bloomberg)

2.

TikTok barbs: Beijing hit out at the US after the House of Representatives voted in favour of a bill to ban app stores from distributing social media app, TikTok, if its Chinese owner, ByteDance, does not divest ownership. In a press briefing on Thursday, foreign ministry spokesman Wang Wenbin said that the bill adopted by the US House puts the US on the opposite side of the principles of fair competition and international trade rules. “If the so-called ‘national security’ can be cited at will to bring down other countries’ competitive companies, there would be no fairness or justice to speak of." When asked about the Chinese mainland’s stance on banning platforms like Instagram, compared to the US’ potential ban on TikTok, he said that China welcomes foreign platforms and services on the premise that they observe local laws and regulations. “This is completely different from the US way of handling TikTok, which is clearly a bullying act and robbers’ logic.” (Ministry of Foreign Affairs of the People's Republic of China)

3.

Cancelled cargo: Chinese wheat importers have cancelled or postponed around one million metric tonnes of Australian wheat cargoes which had been scheduled for shipment between February and April, Reuters reports, citing unnamed sources. Australia is China’s leading wheat supplier and shipped 6.4 million tonnes to the country between January to September 2023. The news of the cancellations comes amid a global wheat surplus, and just one week after the US reported China’s cancellation of over 500,000 metric tonnes of wheat exports. International wheat prices are trading at close to three-and-a-half year lows, after Russia began flooding the market with cheap wheat as it draws down inventories ahead of a bumper harvest. A Singapore-based trader told Reuters that trading companies have vacated shipping slots across a number of Australian ports that had been reserved for China-bound shipments. (Reuters)

4.

Lithium loan: US President Joe Biden is set to inject USD2.26 billion ($3.43 billion) into the country’s largest lithium mining project via a loan from the Energy Department, in efforts to increase domestic production of rechargeable batteries for electric vehicles. Lithium Americas plans to use the loan to build a refining plant at its mine in Nevada which currently sits on the US’ largest lithium deposit. The loan comes as Biden’s administration pushes ahead with its aim of ensuring 50% new vehicles to be EVs by 2030, and despite a global slowdown in EV sales which has drained lithium prices. (Wall Street Journal)

5.

Israel-Hamas war: US Democrat and Senate majority leader, Chuck Schumer, has called for elections to replace Israeli Prime Minister Benjamin Netanyahu. In a speech delivered to the US Senate, Schumer stated that Netanyahu is weakening Israel’s “political and moral fabric” and that if his government remains in power after the war begins to wind down and continues pursuing “dangerous and inflammatory policies that test existing US standards for assistance,” then the US will have no choice but to play a more active role in shaping Israeli policy. Schumer is a prominent Jewish politician and longtime supporter of Israel, and the remarks join a chorus of opposition from Washington toward the Netanyahu government’s approach to the ongoing Israel-Hamas war. (Financial Times)(NBC)

6.

Whatsapp crackdown: Leading PE firms and hedge funds are coordinating a legal strategy to soften penalties from employee use of messaging apps like WhatsApp, Telegram and Signal. Firms including KKR, Blackstone and Citadel are among a group trying to minimise the impact of fines handed down by the US Securities and Exchange Commission’s probe into financial companies failing to preserve work messages on personal devices and apps. Over the past three years, Wall Street banks have been fined over USD2.8 billion for the practice, with JPMorgan Chase & Co. paying USD200 million and Bank of America Corp. fined USD225 million. (Bloomberg)

7.

Bitcoin bust: The London high court has ruled that Australian computer scientist, Dr Craig Wright, is not the founder of leading cryptocurrency, Bitcoin. Wright claimed to be the identity behind the Satoshi Nakamoto identity, which is the nom-de-plume of the individual who wrote the Bitcoin White Paper. The Cryptocurrency Open Patent Alliance (COPA), a group of developers back by Jack Dorsey, sued Wright over his claims to be the founder, and that he owned copyright to the Bitcoin paper. Justice Mellor had been expected to retire to consider the case, but made his ruling as soon as the proceedings had concluded as the “evidence was overwhelming.”(Bloomberg)(BBC)

8.

Rising defaults: S&P Global has found that more companies have defaulted around the world since January than in any start to the year since the global financial crisis. The ratings agency says the tally of corporate defaults stands at 29, making 2024 the highest year-to-date count since 36 were recorded in the same period in 2009. Eight defaults were recorded in Europe while the US has seen 17. Between 2010 and 2023, the average number of defaults for the same period was just over 16. (Financial Times)