Asia stocks climb tracking Wall St rally; Nikkei hits record high, China GDP beats
President Trump does not want Iran to charge tolls for passage through the Strait of Hormuz, and this is expected to be a contentious subject at the negotiations scheduled in Islamabad, Pakistan. Specifically, Trump said that Iran is doing a “poor job” allowing crude oil tankers through the Strait of Hormuz and regarding charging fees for passage, Trump said, “They better not be and, if they are, they better stop now!” More than 800 ships are stuck and waiting for passage through the Strait of Hormuz.
One positive development from the Iran war is that it helped China end its deflationary death spiral. Specifically, on Friday, China’s National Bureau of Statistics announced that producer prices rose 0.5% in March after plunging 0.9% in February. China has had hideous deflation for three years, so if prices firm up, both companies and consumers can finally stop postponing their spending.
The big news on Friday was that the Labor Department reported that the Consumer Price Index (CPI) surged 0.9% in March and 3.3% in the past 12 months. The core CPI, excluding food and energy, rose 0.2% in March and 2.6% in the past 12 months. Gasoline prices surged 18.9% in March and fuel oil prices soared 44.2%.
Believe it or not, the CPI was in line with economists’ consensus estimate, and the core CPI was better than the economists’ consensus estimate of a 0.3% rise. So ironically, the CPI report was positive, and as energy prices fall in the upcoming months, the Fed should be able to resume cutting key interest rates.
The Commerce Department on Thursday announced that the February Personal Consumption Expenditure (PCE) index rose 0.4% in February and 2.8% in the past year. The core PCE, excluding food and energy, also rose 0.4% in February and 3% in the past 12 months. The PCE was essentially in line with economists’ consensus estimates for February.
