North American News
US stocks close higher in volatile trading day. Chipotle earnings disappoint after close
- Buyers not afraid of the Fed
The major US stock indices are closing with gains in what was a volatile up-and-down session especially during and after Fed Powell Q&A session at the Economic Club in Washington.
Looking at the closing levels:
- Dow industrial average rose 265.67 points or +0.78% at 34156.68
- S&P rose 52.97 points or 1.29% at 4164.04
- Nasdaq index rose 226.33 points or 1.90% at 12113.78
Microsoft was a big winner today and contributor to the indices moves higher. It rose $10.91 or 4.25%. It was the biggest winner in the Dow Industrial Average
Chipotle announced after the close:
- Revenues $2.18B vs $2.23B est.
- Adjusted EPS $8.29 vs $8.90 estimate
- Share are down over 5%
U.S. Treasury sells $40 billion a three year notes at a high yield of 4.073%
- WI level was at 4.033%
It may be that the Fed Powell Q&A at the Economic Club had influence on demand for the three year notes.
- Treasury sells $40 billion of three or notes that a high yield of 4.073%
- WI level at the time of the auction 4.033%
- Tail four basis points. That is much higher than the -0.3 basis point scene of the last six months.
- Directs (a measure of domestic demand), 21.1% versus 18.2% over the last six months
- Indirects (a measure of international demand) 59.1% versus 60.70% six month average
- Dealers 19.9% versus 21.0% six month average
- Bid to cover 2.33X vs 2.59X six month average
US consumer credit for December was $11.56 billion versus $25 billion estimate
- US consumer credit for December 2022
- Revolving credit fell to $7.201 billion from $15.299 billion last month
- Non-revolving credit fell to $4.364 billion from $17.808 billion last month
YoY:
- consumer credit is up 2.9% versus 8.4% last month
- revolving credit is up 7.3% versus 15.6% last month
- nonrevolving credit is up 1.5% versus 6.0% last month
Fed’s Powell: We didn’t expect the jobs report this time
- Powell participants in a conversation hosted by the Economic Club of Washington
- Labor market is extraordinarily strong
- Sometimes just I get data the night before it’s released, but just me
- Message from last week’s FOMC is that disinflationary process has begun but has a long way to go
- Repeats that ongoing rate increases will be appropriate, still have not reacted sufficiently restrictive level
- Vote on monetary policy takes place around noon on the second day of FOMC
- My guess is that it will take this year and next year to get down to 2%
- There is now a shortage of workers in the US and ‘it almost feels structural’
- The labor market is ‘at least’ at maximum employment
- Notes that he has regular conversations with most major central banks
- The biggest challenge we face at the Fed is completing the challenge of getting inflation back to 2%
- Repeats that they’re not seeing deflation in core services and that they will need to keep rates high to do it
- We’re not seeing disinflation in housing but expect to see that happen
- Wants to see disinflation in core services ex-housing, says that’s what he worries about
- We still expect that the labor market will soften
- The reality is that we’re going to react to the data, if we get stronger data, we could raise rates higher than we expect
Commodities
Gold firms at around $1870 as the USD turns almost flat
- US Federal Reserve officials expect rates to peak above 5%, with some estimating 5.4%.
- Gold Price Forecast: To remain neutral biased but slightly skewed to the downside.
Gold price clings to gains on Tuesday, though it remains below Monday’s high of 1881.31. The XAU/USD is exchanging hands at 1874.20 after hitting a daily low of 1865.81 at the time of writing.
WTI crude oil futures settle at $77.14
- Up $3.03 or 4.09%
The price of WTI crude oil is settling at $77.14. That is up $3.03 or 4.09% on the day.
The low for the day reached $74.35. The futures settled near the day highs at $77.22
EU News
Major European indices close the session with mixed results
- German DAX and France’s CAC marginally lower
The major European indices are closing the session with mixed results:
- German DAX, -0.16%
- Francis CAC, -0.07%
- UK’s FTSE 100 +0.36%
- Spain’s Ibex +0.14%
- Italy’s FTSE MIB, +0.27%
ECB’s Nagel: It would be dangerous to think inflation problem is solved
- Comments from the ECB Governing Council member
- More significant rate hikes are needed and rate cuts are not on the agenda
Other News
Microsoft unveils new AI-powered Bing search and Edge browser
- Big push from Microsoft on search
Shares of Microsoft are 3.7% higher today and tomorrow Google is under major pressure as it’s likely to roll out its AI competitor.
The broader market is beginning to price in AI-inspired global disinflation right now and how well these products work and integrate will go a long way towards whether that is reality or hype.
Cryptocurrency News
US prosecutors request SEC and CFTC lawsuits against FTX founder Sam Bankman Fried be put off
- The prosecutors suggested prioritizing the criminal cases against Sam Bankman Fried over the civil fraud cases.
- District Judge Lewis Kaplan also rejected the FTX founder’s request to allow the use of communication platforms such as Facebook, Whatsapp, etc.
- Earlier this week, Judge Kaplan had barred the disgraced executive from using Signal as well as contacting any former or current FTX employee.
FTX co-founder Sam Bankman-Fried is facing legal troubles from every possible direction. The amount of charges against the individual has led the United States prosecutors to focus on one case at a time.
CFTC and SEC cases asked to be postponed
In a court filing on Tuesday, US prosecutors asked for the civil fraud cases against FTX’s former head Sam Bankman Fried to be put on hold for now. These cases are the ones being pursued by the Commodity Futures Trading Commission (CFTC) and the Securities Exchange Commission (SEC).
Per the filing, the prosecutors requested that the criminal case against Sam Bankman-Fried be prioritized. This, according to the filing, will help in conserving resources and time as the ruling of the criminal case will decide what issues end up in dispute in the civil fraud cases.
This request was also consented to by Bankman-Fried himself, as well as by the counsel for FTX co-founder Gary Wang and Caroline Ellison. However, no confirmation regarding the same was given by the SEC or CFTC at the time of writing.
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