| Good morning. US stocks move toward record high. Boeing's statements are scrutinized. Apple makes big AI push. The UK faces pressure from banks on China. Here's what's moving markets. — Isabelle Lee The S&P 500 traded less than 1% away from its all-time high, climbing to its highest level since early April. Equites are extending a rebound that's been fueled by speculation the Federal Reserve will be able to cut rates this year as higher-than-estimated jobless claims reinforced bets on policy easing. The advance in stocks has also been attributed to commodity trading advisers — who surf momentum — being modeled to buy shares this week. To Doug Ramsey at Leuthold, another 10% gain in the S&P 500 isn't out of the question statistically. He analyzed 80 years of data on bull-market rallies, focusing on those that happened when unemployment was this low and the economic cycle this mature. If the current rally meets the prior records for length and level, the S&P 500 would end the year at 5,705. Elsewhere, a $25 billion sale of 30-year bonds saw good demand. Treasury 10-year yields declined four basis points to 4.46%. The US Securities and Exchange Commission is scrutinizing statements that Boeing made about its safety practices following a near-tragic January accident aboard one of its 737 Max 9 planes. The SEC investigation is focused on whether comments by the company or its executives misled investors in violation of the Wall Street regulator's rules, according to three people with knowledge of the probe. The probe is examining statements before and after a panel blew off during an Alaska Airlines flight shortly after takeoff on Jan. 5., leaving a gaping hole in the side of the plane, said the people, who asked not to be identified discussing the confidential investigation. SEC reviews don't always lead to enforcement actions by the regulator, but they can lead to fines. The regulator hasn't accused the company or its officials of wrongdoing. The probe adds to legal headaches for Boeing, whose stock has lost about one-third of its value in 2024. Apple will deliver some of its upcoming artificial intelligence features this year via data centers equipped with its own in-house processors, part of a sweeping effort to infuse its devices with AI capabilities. The company is placing high-end chips — similar to ones it designed for the Mac — in cloud-computing servers designed to process the most advanced AI tasks coming to Apple devices, according to people familiar with the matter. Simpler AI-related features will be processed directly on iPhones, iPads and Macs. The move is part of Apple's much-anticipated push into generative artificial intelligence. Apple's plan to use its own chips and process AI tasks in the cloud was hatched about three years ago, but the company accelerated the timeline after the AI craze — fueled by OpenAI's ChatGPT and Google's Gemini — forced it to move more quickly. Rishi Sunak's government faces pressure from banks including HSBC Holdings and Standard Chartered, as well as other major UK firms, to tone down proposed restrictions on doing business with China. Their target is part of new British national security legislation, which aims to boost transparency of any dealings with nations posing a "potential risk to UK safety." Executives are lobbying ministers not to include China in the strictest risk category, arguing that would impede business and trigger negative publicity if they're forced to declare it, according to people familiar with the matter. Even though the government has not made a final decision on how to designate China, there has already been a significant backlash among financial and other firms. The question of how close to let businesses get to China is part of a major political tussle in the UK. The calendar is light for Asia Friday. Honda and Tokyo Electron earnings are coming, as well as a TSMC board meeting. Elsewhere, University of Michigan consumer sentiment is set to be published. In the UK, there's industrial production and GDP, and in the euro area the ECB's account of the April policy meeting. Here's what caught our eye over the past 24 hours: - BOE and markets fall into line over prospect of June rate cut
- SpaceX and Pentagon team up to block Russia from Starlink
- Hong Kong puts Google in hot seat with ban on protest song
- Hopes of Intel's battered bulls dashed again after Huawei ban
- Xi touts China's ties with Hungary as blueprint for Europe
- With 88 deals in 72 hours, it's risk-on in global credit markets
- Private equity's $3 trillion burden sparks hunt for exit options
- Robusta coffee rises as Vietnam's plantations need more rain
As the week winds down, we can already look ahead to next week with the global rate-cutting cycle by central banks on our minds. That's because the hints from the Bank of England on Thursday suggest cuts may come sooner than we had expected. And if the BOE joins the ECB, which is already expected to cut in June, it would mark three European central banks already easing. This turn of events would create tension for global investors, though, as it would essentially leave the developed world operating at three separate speeds. For me, the focus has to be Japan. Global policy divergence kicked off in March when the Swiss National Bank unexpectedly lowered interest rates. Though it was the first G-7 central bank to do so, the SNB was still seen as an outlier because its inflation numbers were enviably low, allowing it to ease monetary policy before others. It was expected that others soon would follow, including, crucially, the Federal Reserve. But the latest inflation readings out of the US have dashed any hopes the Federal Reserve will cut rates before. In fact, swaps markets trade as if the first time a full cut from the Fed can be assured is November, eight months after the SNB started cutting. So we have the three major European central banks cutting or poised to do so, the Federal Reserve on hold for the foreseeable future, and then we have Japan, where rates are pinned at zero percent and there is no indication that will change anytime soon. We're used to Japan dancing to the beat of its own drummer. But we are not used to seeing the potential for such huge gulfs across major central banks on the three continents. It has the makings of potentially unforeseen outcomes. In this potential shift, Japan, with its currency hitting multi-decade lows at over 160 to the US dollar recently, stands out. Question: If a Black Swan event drives a flight to safety, can the yen still play its traditional role a safe-haven currency? Has the depreciation of the yen and the lower interest rates undermined that role and made it unattractive as a safe haven? Or when push comes to shove, will the huge liquidity offered in yen and in Japanese government bonds mean the yen soars with the next big risk-off move? I don't know, but it's worth thinking about. This week, the MLIV Pulse is actually all about safe havens and the best places to hide during risk-off events. So share your thoughts about your favorite safe havens and the best risk-off bets here, and I will be sure to update you when the survey results are in. Ed Harrison writes the Everything Risk newsletter. Follow him on X at @edwardnh. | 
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