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APRIL 21, 2023

P&G EXCEEDS EXPECTATIONS

Procter & Gamble (P&G), the company that owns brands such as Febreze, Charmin, and Tide, exceeded earnings and revenue expectations for the most recent quarter. This was possible through higher prices compensating lower demand for the company’s products. P&G saw a net income of $3.4 billion, with earnings per share of $1.37, up from the same quarter the previous year. The company’s revenue was $20.07 billion, with organic sales up by 7%. However, P&G’s volume fell by 3% as consumers chose cheaper alternatives. P&G reported a 10% increase in prices year-over-year, marking its fourth consecutive quarter of shrinking volume.

TESLA’S MODELS S AND X PRICES SOAR DESPITE MUSK’S PROMISE TO REDUCE THEM

Tesla’s Model S and X vehicles have witnessed a price hike, a day after CEO Elon Musk indicated that the company would continue reducing prices. This price modification may be in response to the 9.7% decline suffered by Tesla shares on Thursday, following Musk’s initial suggestion. Nevertheless, investors have responded positively, with the shares of the electric car behemoth rising during premarket trade. It is worth noting that despite the price changes in its high-end cars, Tesla’s earnings will not be significantly affected since Musk considers the Model 3 and Y less significant to the company’s future.

FEDERAL RESERVE PRESIDENT URGES INTEREST RATE HIKE

Cleveland Fed President, Loretta Mester, suggested that interest rates must be raised above 5% due to high inflation and a strong job market. However, the exact amount of increase and its duration will depend on the progress of the economic and financial developments. Over the past year, the Fed has increased rates by 4.75%, with one more hike expected before pausing at around 5% to 5.25%. Mester acknowledged that the Fed is approaching the end of the ascending interest rate trend, and she will determine in May whether the rates should be raised at that meeting or a later one. Furthermore, to guarantee that inflation remains on a steady downward trajectory, Mester will appraise whether lending standards have tightened to alter the economy. Mester believes that keeping credit available is essential and anticipates an improvement in inflation rate this year.

GOLDMAN SACHS OPTIMISTIC ABOUT US CREDIT MARKET

In light of the recent banking failures, Goldman Sachs remains optimistic about the U.S. credit market. They predict that tighter lending standards will not have a significant impact on U.S. companies, and the market will bounce back by the end of June. Citigroup, on the other hand, is less optimistic about U.S. investments and has moved towards emerging-market high-yield debt. According to Goldman Sachs, The U.S. could avoid recession over the next 12 months and may stop interest-rate hikes.

INTERNATIONAL NEWS

The Eurozone’s economy is recovering faster than expected due to high demand in the dominant services sector, offsetting a decline in manufacturing. However, this may lead to wage pressures, which could hinder the European Central Bank’s efforts to control inflation. The flash Composite Purchasing Managers’ Index rose to its highest level in 11 months in April, mainly due to the service industry’s growth. Consequently, employment index increased to its highest rate since May. The ECB is expected to raise rates, and a further increase in May is probable with the possibility of a larger hike.

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