Macro Briefing: 7 April 2023

* World economy set for weakest near-term growth since 1990, IMF chief predicts
* China’s Xi Jinping willing to speak to Ukraine’s Zelenskyy, says EU chief
* Brazilian President urges Ukraine to give up Crimea to Russia
* China’s economy recovering slower than expected, say Citi analysts
* Trailing US equity premium falls to lowest level since 2007
* US home prices starting to lag inflation, reversing trend in recent years
* Job cuts in US up 15% in March and surge 319% vs. year-ago level
* US jobless claims revised up, reflecting higher layoffs than initially reported
* Global economic growth accelerates in March, according to PMI survey data:

Semiconductor stocks, which are seen as a proxy for the business cycle, closed near a one-year high this week, based on the VanEck Semiconductor ETF (SMH). The upside trend comes as Samsung Electronics, a major chipmaker, says it will cut memory chip production after estimating a sharp drop in its quarterly operating profit. “When the overall economy slowed down, suddenly the demand for these end products slowed. So, the makers of these end products stopped ordering chips and focused on selling through the inventory they already had,” says analyst Peter Hanbury at management consultancy Bain & Company. “This led to a strong ‘bullwhip’ effect for semiconductor makers further back in the supply chain, where sky-high demand during the chip shortage suddenly dried up”, he explains. Market prices for the chip industry overall, however, appear to be pricing in a rebound for demand, or so SMH’s recent rally suggests.