Round up of today's market news *

North American News

Market Momentum Continues: S&P and NASDAQ Extend Winning Streak for Third Straight Day

Dow Industrial Average and Russell 2000 fall. S&P ekes out a small gain

Continuing their upward trend, the broader S&P and NASDAQ indices closed higher for the third consecutive day, albeit with modest gains. Investor optimism remained steady, with a keen eye on upcoming key earnings announcements starting with Meta Platforms after the closing bell. The market eagerly anticipates updates from other major players such as Chipotle, ServiceNow, IBM, and Lam Research, all scheduled to release their earnings reports later today. These developments underscored the cautious yet hopeful sentiment prevailing in the market as investors weighed company performances against broader economic indicators.

The final numbers today show:

Dow industrial average down -42.57 points or -0.11% at 38461.04
S&P index rose 1.11 points or 0.02% at 5071.67
NASDAQ index rose 16.11 points or 0.10% at 15712.75
Russell 2000 index fell -7.21 points or -0.36% at 1995.42

Meta Platforms EPS $4.71 vs $4.32 est. Revenues $36.46B vs $36.1B estimated

Earnings for Q1 2024

Meta Platforms:

EPS: $4.71 vs $4.32 estimate. A year ago, EPS was at $2.20.
Revenue: $36.46 billion vs $36.1 billion.estimate A year ago revenues were at $28.64 billion.
Q2 $36.50 to $39B. Estimate $38.29 billion
Total expense range to $96 to $99 billion versus 94 billion estimate
Expects capital expenditures will be in the range of $35-$40 billion. The market was expecting $34.7 billion. Capital expenditures are expected to increase next year as well
Advertising revenue 35.635 main dollars versus $28.101 million last year

The current after hours price is trading down $-52 or -10.62% at $441.62 as markets react to the higher expenses and Q2 average estimate for revenues below the markets average.

IBM EPS $1.68 vs $1.59. Revenues $14.46 billion vs $14.52B estimated

IBM earnings for Q1 2024

EPS: $1.68 vs $1.59 estimate
Revenues: $14.46 billion vs $14.52 billion estimate

IBM confirmed that they entered an agreement to acquire HashiCOrp for $35 per share or $6.4 billion

Shares of IBM are trading down $7.10 or -3.86% as markets react to the acquisition.

Chipotle EPS $13.37 vs $11.66 est. Revenues $2.70 billion vs $2.67B estimated

Earnings for Q1 2024

Chipotle:

Revenue: $2.7 billion versus expectations of $2.67 billion
EPS: $13.37 versus expectations of $11.66

Shares of AAA are training up $123 or 4.21% at $3050.09

US sells $70 billion of five-year notes at a high yield of 4.659%

WI level at the time of the auction 4.655%

High yield 4.659%
WI level at the time of the auction: 4.655%
Tail 0.4 basis points versus six-month average of 0.5 basis points
Bid to cover 2.39 Xversus six-month average of 2.41X
Directs 19.25% versus six-month average of 17.9%
Indirects 65.74% versus six-month average of 65.4%
Dealers 15.02 % versus six-month average of 16.7%

Atlanta Fed Q1 GDPNow 2.7% vs 2.9% prior

We’re in the final stages for this quarter’s report

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2024 is 2.7 percent on April 24, down from 2.9 percent on April 16. After recent releases from the US Census Bureau and the National Association of Realtors, the nowcasts of first-quarter real personal consumption expenditures growth and first-quarter real gross private domestic investment growth decreased from 3.5 percent and 3.7 percent, respectively, to 3.3 percent and 3.5 percent.

US market advanced durable goods orders 2.6% versus 2.5% expected

Durable goods orders for the month of March 2024

Prior month 1.3% (revised). Revised even lower to 0.7%
nondefense capital goods orders ex air 0.2% vs 0.2% expected.
Prior nondefense capital goods orders ex-air 0.7% revised to 0.4%
Ex transportation 0.2% versus 0.3% expected. Prior month revised to 0.1% from 0.3%
Ex-Defense 2.3% versus 1.5% (revised from 2.1%)

Shipments:

Shipments of manufactured durable goods in March decreased slightly by -$0.1 billion, remaining virtually unchanged at $282.4 billion.
This minor decrease follows a 1.2% increase in February.
Transportation equipment shipments decreased by $0.4 billion or 0.5%, totaling $89.4 billion, contributing significantly to the overall decrease.
This decline in transportation equipment shipments marks a downturn in three of the last four months.

Capital Goods Orders details:

Nondefense new orders for capital goods in March:
- Increased by $4.5 billion or 5.4% to $87.6 billion.
- Shipments decreased by $1.3 billion or 1.5% to $80.5 billion.
- Unfilled orders increased by $7.1 billion or 0.8% to $851.1 billion.
- Inventories increased by $0.7 billion or 0.3% to $230.7 billion.
Defense new orders for capital goods in March:
- Increased by $1.2 billion or 10.6% to $12.9 billion.
- Shipments decreased by $0.1 billion or 0.4% to $14.1 billion.
- Unfilled orders decreased by $1.2 billion or 0.6% to $204.1 billion.
- Inventories increased by $0.1 billion or 0.3% to $25.2 billion.

US MBA mortgage applications W.E. 19 April -2.7% vs +3.3% prior

Latest data from the Mortgage Bankers Association for the week ending 19 April 2024

Prior +3.3%
Market index 196.7 vs 202.1 prior
Purchase index 144.2 vs 145.6 prior
Refinance index 472.7 vs 500.7 prior
30-year mortgage rate 7.24% vs 7.13% prior

David EInhorn (Greenlight Capital) says investors don’t care about value investing

David Einhorn, billionaire president of Greenlight Capital in his letter to investors said:

Investors don’t understand or don’t care about valuations.
Says the value investing industry is dead

That does not stop him from his value investing. Some of the stocks he has bought include:

Penn Entertainment (PENN). The stock is down -33.44% in 2024, but he sees value.
Hewlett Packard (HPQ) – Doen -6.33% in 2024
Roivant Sciences (ROIV) – Down -3.12% in 2024
Liberty Global (LBTYA) – Down -9% in 2024

JP Morgan’s Pinto doubts the Federal Reserve will be cutting rates this year

Inflation the issue

Daniel Pinto is President and Chief Operating Officer of JPMorgan.

He spoke at an event in Washington DC, saying that the Federal Open Market Committee (FOMC) won’t be cutting rates this year unless inflation falls:

“It may take a bit longer until they can cut rates”
Fed isn’t in any hurry
A rate cut that comes too early would be “painful” and probably cause a recession
likelihood of a rate hike is “very, very low”

Goldman Sachs on 2024: expects earnings, equities to rise, inflation & rates to fall

Markets to rise also

Goldman Sachs analyst David Kostin spoke with CNBC. In summary he expects earnings to rise, margins to stay pressured, inflation to fall, interest rates to fall:

“Our forecast is that market rises slowly in line with expectations for earnings”
“Margins will be roughly flat, and then ultimately it’s a little bit about economic growth will drive sales, and that’s largely the reason for earnings to be higher for this year”

US Senate passes US$95bn aid bill for Ukraine, Israel, Taiwan

The bill to provide aid to those countries. Once the vote completes it’ll be off to Biden’s desk, signing it into law.

Trump advisers are planning US dollar devaluation if he gets elected

An article canvassing a plan for a second Trump administration to send the US dollar lower:

According to Politico, Trump’s former trade adviser Robert Lighthizer and several policy allies would seek to make American trade more competitive by purposely weakening the dollar.

BOC Minutes: Agreed that any monetary policy easing would probably be gradual

Highlights of the minutes of the BOC meeting
There were different views on how much more assurance was needed to be confident that inflation was on a sustainable path back to target
Some members felt there was a risk of keeping policy more restrictive than needed
Governing Council was split over when to cut rates
Felt rapid population increase and coming decline in non-permanent residents complicated outlook for activity and inflation
Was more confident that inflation would continue to ease even as growth picked up
Still more concerned about upside risks to inflation but viewed both upside and downside as less acute

Canada February retail sales -0.1% vs +0.1% expected

Canadian February 2024 retail sales data
Prior month -0.3%
The February advance estimate was +0.1%
Ex autos -0.3% vs 0.0% expected
Prior month ex auto +0.5% (revised to +0.4%)
Ex auto and gas 0.0% vs +0.4% prior
Sales down in 5 of 9 subsectors led by fuel stations
Advance March retail sales 0.0%

Retail sales keep Bank of Canada on track to cut rates in June – CIBC

CIBC highlights today’s retail sales report

CIBC sees Canadians growing more cautious about spending as mortgages come up for renewal at much higher rates.

CIBC also notes that warm early-year weather also likely skewed the picture.

“Real goods spending for the quarter a whole still looks healthy, but that reflects the boost to activity at the turn of the year from mild winter weather. Momentum has clearly waned since then, and spending will remain under pressure with the unemployment rate rising and mortgages continuing to renew at higher interest rates. As a result, the BoC will likely start trimming interest rates in June.”

Commodities

Natural Gas sees losses amount to nearly 5% under heavy profit taking

Natural Gas price are agressively reversing after hitting a fresh two-month high in APAC trading.
Gas prices retreat under profit taking after a six-day winning streak.
The US Dollar Index partially recovers from Tuesday’s decline, driven by a big miss on PMI numbers.

Nat Gas needs to let lose of its gains from Tuesday, snapping a six-day rally sparked by a possible escalation of tensions in the Middle East as the US is set to extend sanctions on Iran’s Oil sector. Earlier last week, the Biden administration said it was readying a sanction package that would not disrupt Oil exports to avoid ramping up prices. However, by backtracking and now issuing sanctions on the Iranian oil sector, tensions could flare up again in the coming days, fuelling prices in the overall energy space.

Gold finds a foot and rises to a two-day high

Gold up $12

Gold got ahead of itself in the past seven weeks but it’s showing in the past two days that it might not be dead yet.

The $100 reversal on Monday is still sorting itself out but it’s risen above some minor resistance in the past few minutes.

No help from the inventory data as WTI crude settles down 55 cents

Oil alternating between gains and losses

WTI crude oil traded in a $1.25 range today and initially traded higher briefly on weekly US inventory data before fading afterwards. Oil is about where it was at the start of the week. I take that as something of a win for the bulls, given the declining Middle East tensions.

EIA weekly US oil inventories -6368K vs +825K expected

Weekly US oil inventories
Prior was +2735K
Gasoline -634K vs -1775K expected
Distllates +1614K vs -1093K expected
Refinery utilization +0.4% vs +0.6% expected
Cushing -0.659M

EIA Details:

Oil private survey of inventory shows a draw vs. the build that was expected

This is from the privately surveyed oil stock data ahead of official government data tomorrow morning out of the US.

Crude -3.23 million (+1.8 million exp.)
Gasoline -595,000
Distillates +724,000
Cushing -898,000
SPR +800,000

EU News

European equity close: The three-day winning streak ends

European equities down for the first time this week

Closing changes:

Stoxx 600 -0.5%
German DAX -0.4%
UK FTSE 100 -0.1%
French CAC -0.3%
Italy MIB -0.3%
Spain IBEX -0.5%

Germany April Ifo business climate index 89.4 vs 88.8 expected

Latest data released by Ifo – 24 April 2024

Prior 87.8; revised to 87.9
Current conditions 88.9 vs 88.7 expected
Prior 88.1; revised to
Expectations 89.9 vs 88.7 expected
Prior 87.5; revised to 87.7

UK April CBI trends total orders -23 vs -16 expected

Latest data released by CBI – 24 April 2024
Prior -18

The UK manufacturing order book balance falls in April to its lowest since January. But at least the good news is that the output expectations balance increased to 11 on the month, its highest since October last year.

Switzerland April UBS investor sentiment 17.6 vs 11.5 prior

Latest data released by UBS – 24 April 2024
Prior 11.5

Swiss investor sentiment picks up further in April with analysts also anticipating more SNB rate cuts than they had in January. The current conditions index also improved from 11.1 in March to 17.7 this month.

ECB’s Nagel: June rate cut not necessarily followed up by a series of rate cuts

Remarks by ECB hawk, Joachim Nagel

Services inflation remains high, driven by continued strong wage growth
Not fully convinced that inflation will actually return to target in a timely, sustained manner
Given the uncertainty, we cannot pre-commit to a particular rate path

Under half of analysts expect a BoE rate cut in June

Reuters poll, 31 of 63 look for a June Bank of England rate cut

Reuters poll on Bank of England expectations. 63 economists surveyed:

31 see June cut
30 see Q3
2 say November

The report adds a summary of where we are at:

Governor Andrew Bailey and Deputy Governor Dave Ramsden have recently said UK inflation was falling in line with the central bank’s predictions and the risk of it getting stuck too high had receded.
“It is between June and August, we are leaning slightly towards August on the basis that one of the key things the Bank is looking at is services inflation,” said James Smith, economist at ING Financial Markets. “If services inflation is a little bit stickier, I think that tilts the balance a little bit further towards August over June, but it’s a pretty close call to be honest.”

Asia-Pacific-World News

UBS is dialling back plans in China – high costs, poor profit outlook

ICYMI: Bloomberg (gated) carried the report:

UBS is postponing plans to build its own mutual fund business in mainland China
‘people familiar with the matter’ says its due to high costs and a dim profit outlook
UBS will instead rely on existing joint ventures to expand in China’s mutual fund industry

Australian Q1 CPI +1.0% q/q (expected 0.8%) 3.6% y/y (expected 3.4%)

Australian quarterly and monthly inflation data

AUD has jumped on the higher than expected inflation figures.

The results are also just above RBA forecasts,

This is a nail in the coffin of 2024 rate cuts from the Reserve Bank of Australia.

Headline CPI +1% q/q

expected +0.8%, prior: +0.6%

Headline CPI 3.6% y/y

expected 3.5%, prior: 4.1%

Trimmed mean (a core measure) CPI +1% q/q

expected +0.8%, prior: +0.8%

Trimmed mean CPI 4% y/y

expected 3.8%, prior: 4.2%

Weighted median 1.1% q/q

expected 0.9%, prior 0.9%

Weighted median (another core measure) 4.4% y/y

expected 4.1%, prior 4.4%

Services inflation 4.3% y/y is the lowest since June of 2022

Goods inflation 3.1% y/y is the lowest since September 2022

Australia inflation a bit higher than expected, RBA on hold

Westpac on the inflation data and what it means for the Reserve Bank of Australia

In summary from Westpac’s chief economist Luci Ellis, who was previously Assistant Governor (Economic) at the Reserve Bank of Australia:

Inflation was a bit higher than expected in the March quarter. It is declining, but it has a way to go for the RBA to be confident of returning to the 2-3% target range on the desired timetable.
We expect the Board to keep rates on hold in May, and have pushed out the date of the first rate cut to November this year, previously September.

New Zealand March trade balance +588mn (prior -218mn)

Exports rose from February but imports fell:

imports fell to the lowest since mid-2021

NZ posted a trade surplus for March.

Japan senior lawmaker says yen slide towards 160 could prod action

Traders aren’t taking the bait on this, at least not yet; USD/JPY still at 154.89

The comment is from Takao Ochi of the ruling Liberal Democratic Party, a senior member of the Lower House Financial Affairs Committee. Adding that the ruling party itself is not yet in active discussion on what yen levels would be deemed as worth intervening.

Japan data – March Services PPI 2.3% y/y (prior +2.1%)

Corporate Services Price Index

Japan’s Services PPI is AKA the Corporate Services Producer Price Index.

Its published by the Bank of Japan.

+2.3% y/y

expected +2.1%, prior +2.1% y/y

About 70% of companies in Japan will implement pay-scale increases in fiscal 2024

Findings from a Ministry of Finance survey in Japan

Info via Japan Times:

the proportion of companies planning to raise their pay-scales stood at 70.7%, up by 6.3 percentage points from the previous year
Companies at which pay-scale hikes and regular pay increases will total 5% or more came to 36.5%, nearly doubling from the previous year.
50.2% of small and medium-sized firms said that they had been unable to pass on rising labor costs in their product and service prices

Cryptocurrency News

Bitcoin falls 3% as the halving gain disappears

Bitcoin at the lows of the day

Bitcoin is now down 3.3% on the day, or $2200, to $64,150. Virtually all of the selling has been since the start of the US session and points to some broader angst in risk assets.

It climbed earlier in the week after the halvening but stalled out yesterday and is now back to pre-April 20 levels. The three-day candle paints something of a reversal and in the bigger picture, there is an emerging pattern of lower highs and lower lows, though it’s mainly sideways trading.

BRICS considers launching stablecoin for international trade settlement

BRICS intensifies de-dollarization efforts as they plan to launch stablecoin.
Speculations are that the stablecoin would be backed by gold, considering the huge holdings of BRICS nations.
XRP enthusiasts hint at BRICS leveraging XRP’s upcoming stablecoin.

BRICS is intensifying efforts to reduce its reliance on the US dollar after plans for its stablecoin effort surfaced online on Tuesday. Most people expect the stablecoin to be backed by gold, considering BRICS nations have been accumulating large holdings of the commodity.

BRICs set to launch its own stablecoin

BRICS has stated it’s considering developing a stablecoin for international trade.

This idea was well spoken of by Russian Deputy Foreign Minister Sergei Ryabkov, who highlighted the benefits that stablecoins could add to the group. He stressed the need for the bloc to unite their financial systems, and the stablecoin may be the only solution. With the BRICS’s growing economic status, developing its own stablecoin may help its nations’ economies thrive. This move might also lead to the creation of the bloc’s own native currency.

US SEC is unlikely to approve spot ETH ETFs in May – price to rise regardless

Analysts at Standard Chartered

Analysts at Standard Chartered had previously been tipping U.S. Securities and Exchange Commission (SEC) approval for Ethereum exchange-traded funds as soon as May but no longer:

“We had previously expected the SEC to approve ETH ETFs on May 23,”
“This was based on the view that the ETH approval process would follow a similar trajectory to BTC ETF approval (which the SEC granted in January), and that constructive dialogue would take place between the SEC and the ETF applicants, as it did in the lead-up to BTC ETF approval. So far, however, no such dialogue has occurred (or at least been made public), suggesting that a May 23 approval date is unlikely”

Vitalik Buterin slams controversial gambling project ZKasino following scam allegations

Vitalik Buterin condemned ZKasino’s use of the Zero-Knowledge or ZK in its name.
Buterin warned that ZK is a mainstream buzzword adopted by scammers.
The project has been criticized heavily on X, related firms have allegedly distanced themselves from the controversy.

Ethereum founder Vitalik Buterin took to Warpcaster, a new type of social network, to condemn ZKasino, a decentralized gambling platform based on Layer 2 Ethereum protocol zkSync. Buterin has warned market participants against scammers adopting buzzwords like Zero Knowledge (ZK) in its names.

XRP price capped at $0.55 despite retail holdings nearing all-time highs

Ripple wallets holding up to one million XRP are close to their all-time highs on Wednesday.
Legal expert Fred Rispoli expresses concerns about a second round of the legal battle between Ripple and the SEC.
XRP remains range bound below $0.55 on Wednesday.

Ripple failed to break resistance at $0.55 early Wednesday as traders continue to digest Ripple’s recent response to the Securities and Exchange Commission’s (SEC) allegations of illegally selling XRP as a security.

About the legal battle, cryptocurrency industry attorney Fred Rispoli said a second round of litigation between Ripple and the SEC is likely. Rispoli added that the payment-remittance firm is in a great position to win the lawsuit, but also that there are “ominous signs.”

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Round up of today’s market news

ByBilals Tech