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MNI BRIEF: US 1Q GDP Below Expected; Core PCE Inflation 3.7%

(MNI) WASHINGTON

Inflation heated up in the first quarter while growth slowed.

LATEST INSIGHT

MNI INTERVIEW: BCB Still Likely To Cut By 50 In May-Figueiredo

Former Central Bank of Brazil Deputy for Monetary Policy Luiz Fernando Figueiredo says Copom is unlikely to provide guidance to its steps beyond May.

MNI POLICY: BOJ Stays On Sidelines As Yen Weakens

The BOJ still sees insufficient justification for any monetary policy move in response to a weakening yen.

MNI: CORRECT: BOC Favors Gradual Approach To Rate Cuts-Minutes

Officials agreed more proof was needed that inflation is normalizing while upside and downside risks have moderated.

Political Risk

Putin To Visit China In May

Wires carrying comments from Russian President Vladimir Putin confirming that he will travel to China in May. It will be Putin's first international trip since he secured a new six-year term at the Russian Presidential Election in March.

  • Reuters reported in late March that, according to Kremlin sources, Putin's trip to China would probably take place in the second half of May. Two of the sources said the Putin visit would come before Xi's planned trip to Europe.
  • Notably, the announcement comes as US Secretary of State Antony Blinken continues a trip to China which isn't expected to deliver any concrete breakthroughs on a raft of US concerns over Chinese support of Russia, industrial overcapacity, "unfair" business practices, and confrontational behavior in the South China Sea.
  • Concurrent to the Blinken trip, China’s security chief Chen Wenqing has been in St Petersburg attending security talks with Russian counterparts at an international conference of intelligence chiefs, also attended by security officials from Iran, Brazil, South Africa, China, India, and Iraq.
  • Bloomberg reports that Chen and Russia’s Security Council Secretary Nikolai Patrushev discussed, "strengthening ties between the special services and law enforcement agencies of their two countries at talks on Tuesday."
  • Putin last visited China in October last year for China’s third Belt and Road Initiative forum. In a readout of Putin-Xi meeting at that event, Xi stated that, “developing the China-Russia comprehensive strategic partnership of coordination with ever-lasting good neighborliness and mutually beneficial cooperation is not an expediency, but a long-term commitment.”

Biden Says GDP Report Shows Economy "Remains Strong"

President Biden has issued a statement on today's GDP report saying that, despite a downshift in growth, the economy remains strong. Biden adds that, "we have more work to do," to bring down costs for working families, namechecking his signature policies on 'junk fees' and measures to lower prescription drug costs.

  • Biden: "Today’s report shows the American economy remains strong, with continued steady and stable growth. The economy has grown more since I took office than at this point in any presidential term in the last 25 years—including 3% growth over the last year—while unemployment has stayed below 4% for more than two years."
  • Biden adds: "Congressional Republicans have no plan to lower costs. They are fighting to give the wealthy and big corporations more tax cuts while cutting programs like Social Security, Medicare and the Affordable Care Act."
  • Kathryn Watson at CBS reports that former President Donald Trump delivered ad hoc remarks to the press on the report outside the Manhattan courtroom where his 'hush money' trial is ongoing.
  • Watson: "Trump at court trashes the 1.6% GDP news, says it's going to keep going south "The stock market is, in a sense, crashing.""

US & 17 Other Leaders Issue Joint Statement Calling For Hostage Release

US President Joe Biden and 17 other world leaders have released a joint statementcalling on Hamas to release its Israeli hostages as a pathway to end the Gaza crisis. The statement claims that the "deal on the table to release the hostages would bring an immediate and prolonged ceasefire in Gaza, that would facilitate a surge of additional necessary humanitarian assistance to be delivered throughout Gaza, and lead to the credible end of hostilities."

  • Aun unnamed US official claimed that the Hamas "response to the latest offer from inside Gaza was totally non-constructive". Official: "We do see some indications there might be an avenue for a deal but [are] not totally confident."
  • The statement comes a day after Hamas released a proof-of-life video of 24-year-old Hersch Goldberg-Polin. The Telegraph reports "He said at least 70 of the remaining 130 or so hostages had been killed in Gaza in Israeli bombings...Official Israeli estimates have put the number closer to 35."
  • Senior Hamas official Khalil al-Hayya said to AP that Hamas would agree to lay down its weapons in exchange for the establishment of a Palestinian state along the pre-1967 borders. Such a concession could be seen as a major stepdown for Hamas, given its previous commitment to the destruction of Israel.
  • However, the pledge is likely made knowing that Israel would not countenance such a move. Israel has come under pressure from some alliesto move towards a two-state solution, but this remains very unlikely under PM Benjamin Netanyahu's gov't.

Biden To Announce USD$6.1B CHIPS Deal With Micron In New York/Idaho

President Biden will travel to Syracuse, New York today to announce that the Biden Administration has reached an agreement to provide USD$6.1 billion in federal support for Micron Technology to produce advanced memory computer chips in New York and Idaho.

  • Senate Majority Leader Chuck Schumer, (D-NY), who was personally involved in negotiating Micron's role in four chip factories near Syracuse, said: “It will be the biggest memory chip plant in America. For the Syracuse area, this is the best thing that’s happened probably since the Erie Canal.”
  • The allocation from the CHIP and Science Act pot follows other recent awards to GlobalFoundries ($1.5 billion in grants and $1.6 billion in loans), Intel ($8.5 billion in grants and $11 billion in loans), and TSMC ($6.6 billion in grants and $5 billion in loans).
  • The Department of Commerce said in a statement: “The proposed funding would support the construction of two leading-edge Dynamic Random-Access Memory (DRAM) fabs in New York, the first step in Micron’s two-decade vision to invest approximately $100 billion in New York... [in addition] …the proposed funding would unlock a $25 billion investment in a DRAM fab in Idaho [would] create approximately 6,500 facility and construction jobs."
  • Secretary of Commerce Gina Raimondo said: “With this proposed investment, we are working to deliver on one of the core objectives of President Biden’s CHIPS program – onshoring the development and production of the most advanced memory semiconductor technology...”

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