North American News
US stocks close higher for the 2nd consecutive day
- Gains of around 1.5% for the major indices
The major indices are closing higher for the second consecutive day. The Dow, S&P and NASDAQ indices will close up about 1.5%.
The final numbers showing:
- Dow Industrial Average rose 526.74 points or 1.6% at 33376.49
- S&P index rose 56.78 points or 1.49% at 3878.39
- NASDAQ index rose 162.27 points or 1.54% at 10709.38
- Russell 2000 rose 28.92 or 1.65% at 1776.94
Micron is reporting after the close:
- revenues come in at $4.09 billion versus $4.11 billion estimate
- earnings-per-share come in at -4 cents versus -1 cent expected
- company to cut headcount by roughly 10%
- EPS view $-0.72 to $-0.52 versus $-0.50 expected
- revenues are expected at 3.6 – 4 billion versus 3.88 billion expected
The shares of Micron are trading marginally higher after the close up $0.51 at $51.70
Bloomberg: US recession rises to 70% in 2023
- Up from 65% last month
Bloomberg poll of economists have increased the chance of a recession to 70% from 65% in November. That is also double from the level 6 months ago.
As the Fed adds to the restrictive policy AND raises the terminal rate, it pushes the market toward the hard landing scenario.
US treasury auctions off 20 year bonds at a high yield of 3.935%
- Treasury auctions off $12B of 20 year bonds
- US auctions off $12B of 20 year bonds at high yield of 3.935%
- WI level was 3.948%
- Tail -1.3 bps vs 6 month avg of -0.3 bps
- Bid to cover 2.68X vs 6 month average of 2.56X
- Directs 19.0% vs 6 month average of 17.4%
- Indirects 72.3% vs 6 month average of 71.1%
- Dealers 8.7% vs 6 month average of 11.5%
US Current Account for Q3 -$217.1B vs -$222.0B estimate
- US current account balance for the 3Q of 2022
- Prior balance -$251.1B revised to -$238.7B
- Current account balance -$217.1B vs -222.0B estimate
- The deficit was 3.4% of current dollar gross domestic product down from 3.8% in the second quarter
- The $21.6 billion narrowing of the current account deficit in the third quarter reflected a decrease deficit on goods that was partly offset by a decrease of surplus on primary income increase deficit on secondary income
- Export of goods and services to and income received from foreign residents increased $26.5 billion to $1.14 trillion
- Imports of goods and services from an income paid to foreign residents increased to $4.8 billion to $1.35 trillion
- export of goods increase $7.2 million to $547 billion
- imports of goods decreased $32.5 billion to $818.2 billion
- export of the services increased $4.9 billion-$234 billion
- imports of the services increased $1.6 billion to $173.5 billion
US November existing home sales 4.09m vs 4.20m expected
- US November home sales data
- Prior was 4.43m
- Sales change -7.7% m/m vs -5.4% expected
- Prices +3.7% y/y to median $370,700
Commodities
Gold consolidates below multi-month top, bullish potential intact
- Gold price reverses an intraday dip to the $1,811 area, though lacks follow-through.
- The USD fails to preserve its modest intraday gains and offers support to the metal.
- Hawkish central banks and the risk-on-impulse act as a headwind for the XAU/USD.
Gold price struggles to capitalize on the previous day’s rally of around 2% and hits a hurdle near the $1,822-$1,824 region, or its highest level since late June touched earlier this month. The intraday dip, however, turns out to be short-lived and stalls near the $1,811 area. The XAU/USD turns neutral during the early North American session and remains at the mercy of the US Dollar price dynamics.
Modest US Dollar downtick offers support to Gold price
In fact, the US Dollar Index (DXY), which measures the Greenback’s performance against a basket of currencies, surrenders its modest gains amid a fresh leg down in the US Treasury bond yields. This, in turn, is seen as a key factor lending some support to the US Dollar denominated Gold price. The upside potential for the XAU/USD, meanwhile, seems limited amid the risk-on impulse and the prospects for further policy tightening by major central banks, including the Federal Reserve (Fed).
Hawkish central banks might continue to cap Gold price
It is worth recalling that the US central bank struck a more hawkish tone and indicated that it will continue to hike interest rates to combat stubbornly high inflation. Furthermore, the European Central Bank (ECB), the Bank of England (BoE), the Reserve Bank of Australia (RBA), and the Reserve Bank of New Zealand (RBNZ) have signalled that more hikes were likely. This, in turn, might hold back traders from placing aggressive bullish bets around the non-yielding Gold price and cap gains.
Recession fears could act as a tailwind for Gold price
That said, growing recession fears, amid a surge in COVID-19 cases in China and geopolitical risks, could benefit the safe-haven Gold price. In the latest development surrounding the Russia-Ukraine saga, Ukrainian President Volodymyr Zelensky travels to the United States to meet President Joe Biden. Russia, meanwhile, says that there is no chance of peace talks and that the continued arms supplies by Western allies to Ukraine would lead to a deepening of the ongoing conflict.
Gold price technical outlook
From a technical perspective, acceptance above the very important 200-day Simple Moving Average (SMA) favours bullish traders. The constructive set-up is reinforced by the fact that oscillators on the daily chart are holding comfortably in the positive territory and are still far from being in the overbought zone. That said, it will still be prudent to wait for some follow-through buying beyond the multi-month top, around the $1,822-$1,824 region, before positioning for any further gains.
On the flip side, the $1,812-$1,810 horizontal resistance breakpoint now seems to protect the immediate downside. Any further pullback could attract fresh buyers near the $1,800 mark, which, in turn, should help limit the downside near the 200-day SMA. The latter is currently pegged near the $1,786 area and should act as a strong base for the Gold price, which if broken decisively might negate the near-term positive outlook.
WTI crude oil futures settles at $78.29
- Up $2.06 or 2.68%
The price of WTI crude oil futures for February delivery is closing up $2.06 or 2.68% at $78.29.
The high price reached $78.46. The low price was at $75.82. Helping to push the price higher was the weekly oil inventory data which showed a drawdown of crude stocks of -5.894M barrels which was much higher than the -1.657M estimate. Gasoline stocks did rise however by 2.53M which was higher than the 2.140M estimate.
US weekly EIA oil inventories -5894K vs -1657K expected
- US oil supply data for the week ending Dec 16
- Prior was +10.231K
- Gasoline +2530K vs +2140K expected
- Distillates -242K vs +336K expected
- Refinery utilization vs -0.1% expected
- SPR -3.7m barrels
- Implied demand 20.924 mbpd
EU News
European equity close: Large bids finally arrive
- Frontrunning the Santa Claus rally
- Stoxx 600 +1.6%
- German DAX +1.5%
- France’s CAC, +2.0%
- UK’s FTSE 100 +1.7%
- Spain’s Ibex +1.4%
- Italy’s FTSE MIB +1.5%
Other News
Canada November CPI 6.8% y/y vs 6.7% y/y expected
- Canadian November inflation report highlights
- Prior was 6.9%
- CPI m/m +0.1% vs 0.0% expected
- Prior m/m reading was +0.7%
- Gasoline prices 13.7% vs +17.8% y/y in prior
- Gasoline prices -3.6% m/m vs +9.2% prior
- Food 11.4% vs +11.0% y/y prior
- Mortgage interest costs +14.5% vs +11.4% prior
Core measures:
- BOC core 5.8% vs 5.8% prior
- BOC core m/m 0.0% vs +0.4% prior
- Median 5.0% vs 4.8% prior (revised to +4.9%)
- Trim 5.3% vs 5.3% prior
- Common 6.7% vs 6.2% prior (revised to +6.4%)
Cryptocurrency News
Sam Bankman-Fried returns to Bahamas courthouse, consents to extradition
- He could be headed to the USA soon
Sam Bankman-Fried spent a few nights in a Bahamas prison and has reportedly decided he won’t be fighting extradition at all. Earlier this week it was rumored he would accept extradition but when he got to the courtroom he instead asked for a copy of his US indictment.
Reuters reports that he just entered the Bahamas courtroom. Bankman-Fried consents to extradition, his lawyers say. They claim he is consenting in part out of a ‘desire to make the relevant customers whole’.
Movement of ‘lost’ Quadriga bitcoin highlights the positives and pitfalls of crypto
- QuadrigaCX was a crypto exchange that turned out to be a ponzi scheme
Canadian crypto exchange QuadrigaCX collapsed after it was revealed it was a ponzi scheme and the founder died under mysterious circumstances in India.
Bankruptcy trustee Ernst & Young tried to sort through the mess, which is still ongoing but looked to be winding down with around $46m in recoveries compared to $215m in losses.
However during the process, 104 bitcoin were ‘lost’ just one day after the company went into creditor protection. The exchange said it inadvertently transferred 104 bitcoin into cold storage wallets where it did not have the private key. The remaining management at the firm said it was an error with a setting on the exchange mistakenly changed.
Yesterday, five Quadriga wallets became active again and some of the funds were transferred to a mixer.
The collapse and death have long been the object of conspiracy theories and this move certainly adds some weight to the evidence and highlights (at least) that founder Gerald Cotten wasn’t the only bad actor involved.
Perhaps one day that Satoshi bitcoin will move.
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