Stocks’ backdrop is as muddy as ever, and that’s great news. HSBC:

Another banking giant, HSBC, has come to a similar conclusion about the economic backdrop, and this is the basis for its bullish view on equities and other risk assets.

“Continued subdued sentiment and positioning is just one of many factors that keep us at risk in our tactical asset allocation,” said the strategists, led by Max Kettner, the bank’s chief multi-asset strategist.

Here is its argument. Looking at purchasing managers’ index data for manufacturing, net of new orders, inventories in key areas including the US, the eurozone, Taiwan and Sweden are improving. Financial conditions have also improved, thanks to recessionary volatility, a weaker US dollar, falling US Treasury yields and stabilizing credit spreads.

That doesn’t mean strategists expect growth to accelerate suddenly. they acknowledge, for example, the weakness of the Fed’s regional surveys. But that’s actually good news. “The fact that the backdrop to global growth is certainly better than many had feared, but the result of not sounding unequivocally, is in a gilt environment,” the HSBC team said.

Another point the bank makes is that the consensus still expects a fall, later, and actually deeper than before. That goes for earnings as well, with expectations for steady quarter-over-quarter earnings per share growth ahead of the S&P 500.

SPX:

companies in the second quarter. “Thus, given such subdued expectations, we feel comfortable widening our risk view in the second half. The benchmark for overcoming pessimistic expectations remains low,” says the company.

A weaker dollar

DXY:

should help US earnings, and activity surprises will also help revised earnings per share.

HSBC is particularly bullish on euro zone stocks given lower growth expectations. The bank’s worry about the debt ceiling is not that a deal won’t happen, but the market’s possible reaction to it.

“Certainly, the air is getting thinner with the recent rise in risky assets, as our machine learning models also show,” the firm said. “For example, any relief from a potential US debt ceiling deal could be used to tactically reduce exposure to riskier assets more broadly and wait for better return points (given the potential liquidity drain following any potential deal).

Related to:Who will buy the flood of Treasuries after the debt ceiling deal?

The store

US Stock Futures

ES00:

NQ00:

are lower after the S&P 500’s worst single session

SPX:

UK bond yields since May 2

TMBMKGB-02Y

rose after UK headline inflation was much stronger than expected.

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The hum

Nvidia’s revenue

NVDA:

after the overdue closing. Buoyed by hopes for demand for artificial intelligence, the chipmaker’s shares have more than doubled this year, and the company now has a larger market cap than Berkshire Hathaway.

The minutes of the May Federal Open Market Committee meeting will be released at 2 pm Eastern, focusing on how much the central bank is committed to stopping after a quarter-point rate hike.

Tesla

TSLA:

may choose India as the location for its next factory, CEO Elon Musk said.

Kohl’s stock

CSR:

consolidated as the department store operator posted a surprise profit as comparable-store sales fell 4.3%.

The best of the web

See what Ron DeSantis, who is set to announce the launch of his presidential campaign on Wednesday, hopes to achieve with his feud against Walt Disney.

DIS:

.

Bill Gates puts an AI tombstone at Amazon

AMZN:

and Google

GOOGLE:

.

New Warner Bros. Discovery:

WBD:

A streaming service called Max is experiencing login issues and also teasing its first day.

The best tickets

Here are the most active stock market indicators as of 6 a.m. ET.

Diagram

Bank of America said the reopening of China’s economy has still seen “patchy” growth and that it has been too slow for copper to sustain growth. “New order/inventory ratios in China, a forward-looking indicator, have returned to levels that suggest flat copper prices [year-over-year]. It’s the same story with credit momentum, which has picked up from lows but still highlights the selective nature of official support for the economy,” said analysts led by Michael Widmer. First month copper contract

HG00:

this year it decreased by 5%.

Random readings

The world’s most expensive ice cream costs just $6,400 per serving.

This museum commissioned bakers to create edible versions of pieces from its collection.

Seagulls figure out what to eat by following people.

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