Remember, central bankers: It’s not a race to see who cuts interest rates first. But if it were, Europe would win by a mile. 

As the US braces for a longer wait for that elusive rate cut, the European Central Bank signaled on Thursday that it’s penciling one in for June. It’s the latest sign that the two economies are starting to diverge.

Soft Spot

The US economy remains quite strong, but inflation remains quite persnickety; on Wednesday, the latest CPI report showed year-over-year inflation of 3.5% in March, higher than expectations. Europe, meanwhile, is something of a mirror image: While the economy has largely stagnated compared to the US, headline inflation in the eurozone last month fell to 2.4%, a decrease from February, and approaching a 2% target — the same threshold for success set by the US Fed.

ECB bankers opted to maintain its record 4% interest rate (the Fed’s is still at a range of 5.25% to 5.5%) but noted that it would be “appropriate to reduce the current level of monetary policy restriction” pending continued positive data. The comment “suggests that an interest rate cut at the next meeting in June is very likely,” Jack Allen-Reynolds, an economist with Capital Economics in London, told The Wall Street Journal.

Markets are already reflecting such optimism:

• Following Wednesday’s CPI report, futures markets odds for a rate cut by June in the US quickly fell to around 20% from 50%, with traders betting the next-likeliest cut now won’t come until December. In the EU, growth-minded cuts look far more attractive, and traders still see an above-80% shot of a June rate cut. 
• Meanwhile, big investors are exiting US treasuries and snapping up European government bonds, reflecting expectations of a quicker rate cut in the EU. The spread between the benchmark 10-year German and US borrowing costs grew to 2 percentage points, approaching the highest level since late last year.

Impossible Mission Fund: Still, if the ECB moves too quickly, it could wallop the value of the euro — rendering all its progress thus far moot. “There can only be so much divergence before it starts to have a big currency impact,” Mike Pond, head of global inflation-linked research at Barclays, told the Financial Times. Meanwhile, in a speech ahead of next week’s meeting of global central bankers, International Monetary Fund Director Kristalina Georgieva warned of declaring victory too quickly in the inflation fight, saying “Premature easing could see new inflation surprises that may even necessitate a further bout of monetary tightening.” Translation: Keep your champagne — yes, produced in the Champagne wine region of France — in its bottle, you snooty Europeans.

Ford isn’t going after Tesla — just its customers.

The Big Three legacy car titan has unveiled a special discount for Tesla owners who purchase its F-150 Lightning EV pickup, just one day after Ford dropped the Lightning’s price by up to $5,500 to boost flagging demand.

Ford’s Focus

According to a dealer bulletin seen by the Cars Direct website, any F-150 Lightning version features an additional $1,500 rebate for customers who own or lease a 2008 or later Tesla model — and they can even transfer the deal to anyone in their household. If you throw in a tax credit and other incentives, it could mean the Lightning is 25% cheaper for Tesla owners, Cars Direct said.

Ford’s strategy is probably twofold: For starters, the company may be betting that Tesla fans either don’t love the idea of driving something that looks like this or just don’t want to wait until 2025 for Tesla’s entry-level Cybertruck, which will still cost around $61,000. Then there’s trying to solve the problem of selling F-150 Lightnings to anyone:

• Ford said earlier this year that it planned to scale back production of the 2024 Lightning as demand had slowed from early last year and inventory remains high. The company announced last week it was delaying production of new SUV and pickup electric models to focus on rolling out cheaper hybrid models by 2030.
• Ford plans to cut its staff by two-thirds (about 1,400 people) at its Dearborn, Michigan, factory that builds the F-150 Lightning. Half of the cuts will be jobs transferred to another plant, while the other half of staffers can choose between reassignment or a $50,000 retirement package.

Misery Loves Company: This isn’t just a Ford problem, and the mass transition to EVs doesn’t strike anyone as being around the corner. Folks who wanted an EV and could afford it have bought one, we still haven’t solved the battery-weight issue, government credits in both the US and Europe have expired, and we’re just slightly off our goal of building half a million charging stations. The exasperation was eloquently captured by Ford division chief Marin Gjaja, who recently told The Detroit News, “I don’t have a lot of patience for us getting the forecast wrong, but the reality is we all sort of got it wrong.”

The stars are aligning for Constellation Brands. 

On Thursday, the massive beer-and-wine-and-spirits conglomerate reported stellar earnings results for its fourth quarter, thanks almost entirely to a strong performance in its beer division — which sells popular imported beers like Corona, Modelo, and Pacifico.

Skim Crawford

One company’s catastrophe is another’s opportunity. Last year, Anheuser-Busch InBev faced conservative backlash for its Bud Light ad featuring transgender activist Dylan Mulvaney, allowing Constellation’s not-quite-All-American cerveza Modelo to surge to the top of US beer sales (In an interesting quirk, AB InBev owns the rights to Modelo in every market in the world other than the US). 

Modelo’s strong sales, coupled with Corona and Pacifico, continued in its most recent quarter period, rising 11%. That powered Constellation’s earnings beat, with revenue of $2.14 billion besting most analyst expectations. Still, the company’s wine and spirits portfolio — which includes Kim Crawfords, Ruffino, Svedka, and Casa Noble tequila — struggled, and the company says it’s focused on a turnaround in those categories:

• Wine and spirits net sales declined 6% in the quarter, as wholesalers across the country reduce high-priced premium brands in response to consumer habits amid sticky inflation.
• While the company expects sales in the units to either decline or grow by, at most, a half-percentage point in its next fiscal year, it says it will put more focus and investment toward supporting its key brands across wine and spirits.

Still, citing continued beer demand, Constellation forecast profit for the upcoming year above analyst expectations.

Hard Truths: Thursday’s earnings marked the second major recent win for Constellation. In late March, a US appeals court ruled that the company was well within its rights to sell Corona and Modelo-branded hard seltzers in the US after AB InBev sued alleging the seltzers constituted a trademark violation. Constellation won the case in part by arguing that its contract with AB Inbev allowed it to distribute Modelo beer in the US, and that hard seltzers fell within the definition of “beer.” Sure, a judge may say so. But try telling that to the microbrew-loving, double-IPA sipping hops snob in your life.