What's Happening

Global equity markets are mostly flat this morning as investors await a slew of earnings reports and a key report on U.S. inflation. U.S. futures are heading lower, and the selling has accelerated on news that U.S. regulators will recommend pausing the use of Johnson & Johnson’s COVID-19 vaccine due to blood-clotting issues (more below).

The U.S. consumer-price index for March is expected to rise 0.5% from one month earlier and 2.5% from the same period last year. Most of that rise will come from food and energy, which most people need to buy. The yield on the 10-year U.S. Treasury is springing back up as the Federal Reserve and other forecasters continue to point to the strength of the economic rebound, and oil prices are also ticking higher. 

American consumers are pretty sure inflation will continue to be a factor this year, even though the Federal Reserve is not worried about it. The Federal Reserve and Bank of New York's March Survey of Consumer Expectations showed that Americans think inflation will rise about 3.2% over the next 12 months, the highest reading in the survey since April 2014. Rebounds come with higher prices.

Speaking of higher prices, Bitcoin and Ethereum, two of the most popular and widely held cryptocurrencies, are both at record highs yet again. They've been doing that for the past 12 months, but this surge comes the day before Coinbase, 

• Britain's economy grew 0.4% in February after shrinking 2.2% in January, government data released today showed. GDP was still 7.8% below the levels seen in February 2020 before the pandemic. The all-important service sector grew by 0.2% as wholesale and retail trade sales picked up a little. Non-essential shops were allowed to reopen for the first time this year yesterday as restrictions loosened.
• Apple is working on a smart-home product that combines its Apple TV set-top box with a HomePod speaker and a camera for video conferencing through a connected TV, reported Bloomberg. Sources say the tech giant is also considering launching a high-end speaker with a touch screen to better compete with market leaders Google and Amazon.
• Worldwide PC shipments grew 32% year over year in Q1, the fastest pace in at least two decades, said Gartner. Growth is understandably high since we're comparing shipments to early 2020 chaos when the pandemic first hit, but researchers say also consider semiconductor shortages right now, which are affecting the supply chain and extending shipment lead times.

The U.S. government budget deficit for fiscal 2021 has crossed $1.7 trillion in the first half, up from $743 billion during the same period in fiscal 2020. March alone added $660 billion to the 2021 deficit with the second round of stimulus checks going out. Total spending last month was the third-largest on record at $927 billion, behind only June and April in 2020. The chart below shows receipts, spending and deficit so far this fiscal year, which began in October. the largest U.S. crypto exchange, plans its direct listing on the Nasdaq tomorrow.