North American News
US stocks close lower on the day. Nasdaq rises 4.4% this week. Dow has a small decline
- S&P up modestly this wek
The major US indices are closing the day with declines across the board. The declines were led by the Dow but the S&P also fell by 1%. The Nasdaq was the best of the worst.
For the week, the pattern was the same as flow of funds moved into the big tech cap stocks of the Nasdaq. The Dow fell on the week and the S&P had a modest gain.
A look at the final numbers for the day shows:
- Dow Industrial Average fell -384.52 points or -1.19% at 31861.97
- S&P index fell -43.64 points or -1.10% at 3916.65
- NASDAQ index fell -86.75 points or -0.74% at 11630.52
- Russell 2000 fell -45.34 points or -2.56% at 1725.89
for the trading week:
- Dow Industrial Average closed near unchanged at -0.15%
- S&P index closed up 1.43%
- NASDAQ index was the big winner with a gain of 4.41%
University of Michigan sentiment preliminary for March 63.4 versus 67.0 last month
- University of Michigan sentiment index for March 2023 (preliminary)
- Prior month 67.0%
- preliminary index for sentiment 63.4 versus 67.0 estimate
- current conditions 66.4 versus 70.0 estimate
- expectations index 61.5 versus 64.5 estimate
- one year inflation expectations 3.8% versus 4.1% last month. Lowest since April 2021
- five year inflation expectations 2.8% versus 2.9% last month. Lowest since April 2021
WSJ Timiraos: The Fed decision likely be dependent on market response in coming days
WSJ Timiraos on CNBC:
- 25 basis point hike because skipping hike risks a market melt up
- the case for a pause boils down to concerns that credit events can turn serious and it’s better to move slowly
- The Fed decision likely to be dependent on market response in coming days
- Everything we heard from the Fed is we have the tools to solve financial stability problems so we can keep our eyes on the prize of restoring price stability.
US February industrial production 0.0% versus 0.2% estimate
- US industrial production capacity utilization for February 2023
- Prior month 0.0% (they expected 0.5%)
- industrial production for February 0.0% versus 0.0% revised higher to 0.3%)
- capacity utilization 78.0% vs 78.4% estimate. Last month 78.3% revised lower to 78.0%
- manufacturing output MoM 0.1% versus -0.2% estimate. Last month 1.0% was revised higher to 1.3%
- industrial production year on year -0.25% vs 0.49% last month. Last month was revised lower from 0.79%
US leading index for February -0.3% versus -0.3% estimate
- US a leading index for February 2023
- Prior month -0.3%
- leading index -0.3% versus -0.3% estimate
- the index is down for the 11th consecutive month
Commodities
Gold to advance nicely in the second half of the year as Fed pauses – ANZ
Repricing of the Fed’s terminal rate will drive the Gold price in the short-term. Economists at ANZ Bank expect the Fed to pause its interest rate hiking cycle this year. This should lower the USD and leave US real yields intact, then lifting XAU/USD in the second half of 2023.
A weakening greenback will be a key tailwind for Gold prices
“Improving fundamentals across other major economies could limit the greenback’s upside. Our DXY forecast trajectory remains unchanged, and has the index falling to 98 by end of the year. This will be a tailwind for the Gold market.”
“We believe recalibration of market expectations around the FFR could keep gold prices volatile in the short-term. Nevertheless, we still expect the Fed to pause and for yields to trend lower towards year-end, which should support Gold prices in H2 2023.”
“We see last year’s monetary tightening starting to show up in slowing economic growth later this year. This could have a dual impact: slowing economic growth could trigger monetary policy easing, and Gold could attract haven flows.”
Crude oil down around 13% this week
- Off lows but oh what a fall this week
The price of WTI crude futures reached a new week low of $65.38. That took out the low from earlier this week at $65.65. Looking at the weekly chart, the price also move below its 200 week moving average at $66.14. However the price has rebounded and currently trades at $66.62.
So for the third time this week a look below the 200 week moving average has found buyers. Traders are little bit reluctant.
EU News
European indices close the day and the week sharply lower
- The German Dax and the UK FTSE 100 tested 100 week MA
The major European stock indices are closing the day with sharp declines. For the trading week the indices are also lower as concerns about financial conditions in Switzerland hurt sentiment. Concerns about global growth are also weighing as is the ECB 50 basis point hike this week. Finally, the European indices have been relatively stronger in 2023. The German DAX, France’s CAC, and Spain Ibex are all higher on the year. The UK FTSE 100 is negative however.
A look at the close levels shows:
- German DAX fell -198.9 points were -1.33%
- France’s CAC felt -100.30 points or -1.43%
- UK’s FTSE 100 fell -74.63 points or -1.01%
- Spain’s Ibex fell -178.42.4 or -2.01%
For the trading week:
- German DAX fell -4.28%
- France’s CAC fell -4.09%
- UK’s FTSE 100 fell -5.33%
- Spain’s Ibex -6.09%
ECB Insider: I’d support another 50 BP hike
- Econostream Media reporting
There is a report from Econostream Media that an ECB insider is talking. More specifically, the unnamed source says:
- I do support another 50 basis point hike in May, unless economy or core HICP softens
- NO doubt that we are still in a tightening mode
- no hurry to decide our next move, can wait until the time comes
- 50 basis point hike not much when real interest rates clearly negative
- 4.5% terminal rate only if inflation turns out unexpectedly persistent
Other News
SVB Financial files for Chapter 11 bankruptcy
- Filing for chapter 11 to preserve value
SVB Financial commences Chapter 11 proceedings to reserve a value
- Believes it has $2.2 billion of liquidity
- Strategic alternatives process for SVB capital and SVB securities operations underway with significant interest
- Funding debt is roughly $3.3 billion in aggregate
- Has $3.7 billion preferred equity outstanding
Credit Suisse: At least 4 global banks have put restrictions on new dealings with the CS group
- More news from Credit Suisse
- At least four global banks have put restrictions on new dealings with Credit Suisse group AG
- At least two banks are taking measures that involve cutting unsecured exposure to Credit Suisse in new dealings
- Deutsche Bank/value it assigns to Credit Suisse securities as collateral on loans to wealth management clients
- Societe Generale has not changed existing positions with Credit Suisse, but it is not increasing them either
- HSBC private banking business scrutinizing loans linked to Credit Suisse securities, has not made a final decision
- Credit Suisse did not have immediate comment; it has previously said its capital and liquidity basis is very strong
Cryptocurrency News
Binance removes BUSD from its $1 billion SAFU Fund, swaps it with USDT and TUSD
- Binance earlier this week also swapped the BUSD in its Industry Recovery Initiative Fund to Bitcoin, Binance Coin and Ethereum.
- The decision came in following BUSD issuer Paxos’ announcement of halting the minting of new coins due to regulatory concerns.
- Binance Coin price is inching closer to its critical resistance around 330 after marking a 7% increase on Thursday.
Binance has been facing a lot of flak from users and regulators for the last couple of weeks. The biggest issue that stumped Binance was the decision taken by Paxos to stop minting new Binance USD (BUSD) tokens, forcing the crypto exchange to switch to other stablecoins.
Binance moves to Tether
In a blog post on Friday, the world’s biggest cryptocurrency exchange Binance announced that it would be swapping out its BUSD holdings. The funds in the company’s Secure Asset Fund for Users (SAFU) will no longer contain any BUSD token as they will be swapped with Tether (USDT) and TrueUSD (TUSD).
The decision came into effect following Paxos’ announcement of stopping minting BUSD due to regulatory concerns in the United States. Calling it to be a long-term solution, Binance noted that the change in the asset would not bear any impact on the funds or the users. The fund, back in January this year, reached a total value of over $1 billion at the market price of the asset back then.
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