North American News
In the US stock market today, the major indices all closed sharply higher
- The Dow rose 614.46 points or 1.85% at 33916.40
- S&P rose 103.52 points ro 2.47% at 4287.49
- Nasdaq rose 382.60 points or 3.06% at 12871.54
- Russell 2000 rose 33.90 points or 1.80% at 1917.94
U.S. Treasury auctions off $44 billion of 7 year notes at high yield of 2.908%
- WI level was trading at 2.891% at the time of the auction
- High yield 2.908%
- WI level 2.891%
- Tail 1.7. The six month averages 0.4 basis points
- Bid to cover 2.41X. The six month average is 2.34X
- Directs 19.8%. The six month average is 22.9%
- Indirects 65% . The six month averages 61.6%
- Dealers 15.2%. The six month averages 15.4%.
Apple EPS Comes In At $1.52 Versus $1.43
- Revenues $97.28 billion versus 93.89 billion estimate
- Earnings -per-share $1.52 versus $1.43 estimate
- Revenues $97.28 billion versus $93.89 billion estimate
- service revenues $19.82 billion versus $19.72 billion estimate
- iPhone revenues $50.57 billion versus $47.88 billion estimate. Sales up 5% year on year
- iPad revenues $7.65 billion versus $7.14 billion estimate. Sales up 2% year on year
- other products $8.81 billion versus $9.05 billion estimate
- Mac revenues 10.44 billion versus 9.25 billion estimate
- Apple shares are currently up $6.33 or 3.68%
- Increases share buyback $90B
- increases dividend 5% to $0.23 per share
Apple’s Timothy Cook said:
- We grew in each of our categories except for iPad where we had some very significant supply constraints for the quarter
- The last seven quarter have now been the top 7 quarters ever in the history of the Mac
Amazon earnings not good. Loss of -$7.56 vs gain of $8.36 expected
- Revenues come in near expectations
Amazon reported an unexpected loss of $-7.56 versus an expected gain of $8.36. The Rivianan impact seems to be more than expectations.
- Revenues though came in about as expected at 116.4 billion versus expectations of 116.3 billion
- Expectations for next quarter revenue of $116 billion to -$121 billion versus streets estimate of $125 million
- AWS grows at 37% year-over-year
- Subscription services revenue $8.4 billion versus $8.6 billion estimate
- AMZN stock is currently down around -7.7%
Intel earnings :
- EPS of $0.87 versus expectations of $0.81
- Revenues came in at 18.4 billion versus 18.3 billion expected
- Reaffirms fiscal year revenue guidance, but Q2 guidance was weaker
- Intel stock is currently down over -5%
Robinhood earnings
- EPS $-0.45 versus $-0.36 estimate
- Revenues 299 million versus $356 million estimate
- Active users down 8%
- The stock is down 8%
Roku
- EPS loses -$0.19 versus $0.18 estimate
- Revenues $734 million versus $718 million estimate
- Roku stock is trading above and below unchanged
Overall, whereas yesterday’s earnings led to increases in stock prices after hours, the earnings today are leading to lower prices.
The granddaddy of them all, Apple, has yet to release. Apple share are down about -0.62% in after hours trading at $163 Apple after a 4.52% gain today.
Commodities
Gold Price Forecast: XAUUSD to enjoy robust investment demand this year – Commerzbank
Today has seen the World Gold Council (WGC) publish its report on gold demand trends in the first quarter. The data shows high first-quarter gold demand thanks to strong investment demand, which is set to remain in place for the rest of the year, economists at Commerzbank report.
Gold demand at three-year high
“Global gold demand soared by 34% YoY to 1,234 tons, its highest level since the fourth quarter of 2018. It was driven solely by strong investment demand, which tripled YoY to 551 tons. This is attributable in turn to the high ETF demand amid the Ukraine war and the steep rise in inflation.”
“For as long as the geopolitical uncertainties and the high inflation environment continue, the WGC envisages robust investment demand this year.”
“Jewellery demand is expected to remain largely constant. The lockdown measures in China will prevent it from recovering to the average levels seen in the past, as they are contributing to lower consumer demand there.”
“Central banks are set to remain net buyers of gold this year, albeit on a lower level.”
Silver Price Analysis: XAG/USD fails to rebound from $23.00 despite weak US GDP data, eyes $22.00
- Silver only saw a very modest bounce from their lowest levels since mid-February under $23.00 after weak US GDP data.
- As US yields move higher and USD remains resilient, XAG/USD remains at risk of t4esting earlier 2022 lows at $22.00.
Spot silver (XAG/USD) prices only saw a very modest bounce from their lowest levels since mid-February under $23.00 in wake of data showing a surprise drop in US GDP in Q1, with the US dollar having pulled back from highs. But any more meaningful rebound does not appear to be forthcoming, with XAG/USD for now still only trading just above the $23.00 mark and still nursing on the day losses of about 1.0%.
The US dollar has been on a rampage higher in recent days with the US Dollar Index (DXY) hitting five-year highs above 103.00 this week and nearing 104.00 earlier on Thursday amid worries about geopolitics, global growth and expectations for aggressive Fed tightening. This has weighed heavily on the precious metal complex, with both silver and gold being battered.
Indeed, at current levels near $23.00, XAG/USD trades with on-the-week losses of nearly 5.0% and trades nearly 12% below last week’s highs above $26.00. Some analysts might interpret the latest US GDP numbers as lessening the likelihood that the Fed in the coming months signals a further hawkish shift in its rate guidance towards outright restrictive interest rates (i.e. above the 2.5% neutral level).
But, for now, markets do not appear to be reading things this way. US yields continue to press higher and the buck looks likely to remain buoyant, perhaps given the latest inflation readings for Q1 that came out alongside the GDP growth figures showed another rise. XAG/USD remains vulnerable to retesting annual lows around $22.00 and returning to Q4 2021 lows in the mid-$21.00s.
WTI crude oil futures settle at $105.36
- Up $3.34 or 3.27%
The price of WTI crude oil futures are closing/settling up $3.34 or 3.27% at $105.36. The report early today that Germany is no longer pose to an embargo on Russian oil. The result could be a further tightening of global supplies. Germany would look to find ways to replace Russian oil with other supply. Germany imported about one third of its oil from Russia before the invasion of Ukraine. The German economic minister Habeck recently said that the import about 25% currently.
Yesterday Russia cut off gas supplies to Poland and Bulgaria after they refused to pay in rubles.
EU News
European equity close: Off the highs but shrugged off the late wobble
- Decent gains after a scare
- Stoxx 600 +0.5%
- German DAX +1.2%
- UK FTSE 100 +0.9%
- French CAC +0.8%
- Italy MIB +0.6%
- Spain IBEX +0.1%
Other News
Another dive in Tesla shares isn’t helping the mood in equities
- Strong start loses some ground
Elon Musk is an unpredictable man.
Twitter shares are trading 10% below his bid in a continuing indication that the market is pricing in a decent likelihood that it falls apart.
Tesla shareholders are also unhappy today. There’s some thinking that he could be distracted by the Twitter bid and others worried he could sell (or be forced to sell) his TSLA shares to fund his $44 billion bid for Twitter.
In any case, Tesla shares are down nearly 5% today and 16% this week. That’s despite reporting earnings that were far better than expected. Technically, there’s not much in the way for support until $700-$750.
Given these declines, Musk has lost more paper wealth than his TWTR bid is worth.
The other issue is that the aura of Cathie Wood is imploding. She made her name on very aggressive calls on Tesla that came true. It’s the largest holding in her portfolio at 9.34%.
The problem today is that her third-largest holding is Teladoc and shares of that company are down 44% today and nearly 90% from the Feb 2021 high.
The ‘transformative innovation’ gurus aren’t having a great day; in part because this market is increasingly looking at the bottom line and cash flows.
The S&P 500 has trimmed a 50 point gain to 31 points. The Nasdaq has also given up nearly half its gain.
Guangzhou orders mass testing and grounds flights after covid cases found at airport
- Airport staff and close contacts found with covid
The southern Chinese city of Guangzhou — population 15.3 million — ordered mass testing in seven districts and grounded all domestic flights for two days after cases among airport staff and close contacts.
Today, officials announced that 1.4 million tests had been conducted and at least four infections detected.
In Shanghai, there’s some optimism after cases fell for the fourth straight day but worry is growing in Beijing where 56 new locally-transmitted cases were found.
Worry about China has been one of the main drivers of weakness in global markets but this week that’s been somewhat balanced by President Xi calling for “all out efforts” to boost infrastructure in order to meet growth targets.
Looking further out, we will ultimately need some kind of resolution of covid-zero in order to have any strong underpinning of global growth optimism and supply chain normalization.
Cryptocurrency
Bitcoin joins the party, climbs more than 3% on the day to above $40,000
- Bitcoin tracks the risk trade
There are a handful of ways to measure the risk trade more broadly and it’s the alignment of them that often provides a clear signal on where we’re heading next.
There are times when certain assets can be added to that list or removed for a long list of reasons but it always gravitates back to that group.
At the moment, bitcoin is vying to be added to the group. For a time, the bitcoin evangelists argued it was more of an inflation hedge or an uncorrelated asset but that certainly hasn’t been the case. Instead, it’s turned into another way to track and trade broad sentiment. At times it’s been the best intraday leading indicator of better sentiment out there.
Today it was strong early but wobbled on the tech reversal but now it’s making new highs, up 3.2% to $40,355. That erases the swoon on Tuesday and puts it within striking distance of the weekly high of $40,784. It’s also slightly higher on the week, which is a big win in this environment.
The weekly chart, in fact, is probably the best look. It shows a non-trending trade but doesn’t show any indications of a breakdown in sentiment. Including this week, there are are series of higher lows and we wait for a break into a trending trade.
On its own, that would be a neutral chart but given the pain in tech stocks, holding its ground is a good look for BTC. Seasonally, May is a strong month.