Round up of today's market news *

North American News

Market Momentum: US Stocks Hit Record Peaks, Defying Inflation Concerns

Embracing a Low-Rate Environment: Navigating a New Financial Landscape

Despite initial caution following the release of cooler CPI and retail sales data today, the market gradually warmed up and embarked on a bullish trajectory, culminating in the S&P 500 achieving new record highs. The index’s impressive surge persisted throughout the trading day, ultimately closing above the significant 5300 mark for the first time in history, surpassing the highs set back in March with a notable flourish. This robust performance underscores growing investor confidence and resilience in the face of economic indicators, hinting at sustained bullish sentiment in the market.

Closing changes:

S&P 500 up 61 points, or 1.2%, to 5308
Nasdaq up 1.4% to a record 16, 742
Russell 2000 +1.0%
DJIA +0.9%

US April CPI 3.4% y/y versus 3.4% expected

US April 2024 consumer price index data

Headline measures:

Prior y/y 3.5%
CPI m/m +0.3% versus +0.4% expected
Prior m/m 0.4%
Unrounded +0.313% vs +0.359% m/m prior (consensus unrounded +0.37%)

Core measures:

Core CPI m/m +0.3% versus +0.3% expected. Prior month 0.4%
Unrounded core +0.290% vs +0.359% prior (consensus unrounded 0.30%)
Core CPI y/y +3.6% versus 3.6% expected. Prior month was 3.8%
Shelter +0.4% versus +0.4% prior month
Shelter y/y +5.5% vs +5.7% prior
Services less rent of shelter +0.2% m/m vs +0.65% prior
Services less rent of shelter % y/y vs +4.8% prior
Real weekly earnings -0.4% vs +0.3% prior
Food 0.0% m/m vs +0.1% m/m prior
Food +2.2% y/y vs +2.2% y/y prior
Energy +1.1% m/m vs +1.1% m/m prior
Energy +2.6% vs +2.1% y/y prior
Rents +0.4% m/m vs +0.4% prior
Owner’s equivalent rent +0.4% vs +0.4% prior

Sticky-Price CPI

The Atlanta Fed’s sticky-price consumer price index (CPI)—a weighted basket of items that change price relatively slowly— increased 4.6 percent (on an annualized basis) in April following a 5.0 percent increase in March. On a year-over-year basis, the series is up 4.4 percent.

On a core basis (excluding food and energy), the sticky-price index increased 4.6 percent (annualized) in April, and its 12-month percent change was 4.4 percent.

The flexible cut of the CPI—a weighted basket of items that change price relatively frequently—increased 2.0 percent (annualized) in April and is up 0.6 percent on a year-over-year basis.

Atlanta Fed GDPNow growth estimate for Q2 down to 3.8%

Down from 4.2%

The Atlanta Fed GDPNow growth estimate for Q2 down to 3.8% from 4.2% previously.In their own words:

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2024 is 3.8 percent on May 15, down from 4.2 percent on May 8.After recent releases from the US Department of the Treasury’s Bureau of the Fiscal Service, the US Bureau of Labor Statistics, and the US Census Bureau, a decrease in nowcast of second-quarter real personal consumption expenditures growth from 3.9 percent to 3.2 percent was slightly offset by an increase in the nowcast of second-quarter real gross private domestic investment growth from 6.8 percent to 7.3 percent.

US April retail sales 0.0% vs 0.4% estimate

The US retail sales data for April 2024

Prior month 0.7% revised to 0.6

Details:

Retail sales for April 0.0% vs 0.4% expected
Ex-Auto MoM 0.2% vs 0.2% expected. Prior month 1.1% revised to 0.9%
Control group -0.3% vs 0.1% expected. Prior month 1.1% revised to 1.0%
Ex Auto and Gas -0.1% vs. 1.0% last month revised to 0.7%. 2nd weakest of the year

US NY Fed Manufacturing index for May -15.6 vs -16.00 estimate

The NY Manufacturing index for May 2024

Prior -14.3

Details:

Empire Manufacturing -15.6 versus -14.3 last month
New orders -16.5 versus -16.2 last month
Prices paid 28.3 versus 33.7 last month. Better
Prices received 14.1 versus 16.9 last month. Better
Number of employees -6.4 versus -5.1 last month
Average work week -5.8 versus -10.6 last month
Shipments -1.2 versus -14.4 last month
Unfilled orders -8.1 versus -10.1 last month
Delivery times -9.1 versus -7.9 last month

Expectations 6-month forward is showing:

general business conditions 14.5 versus 16.7 last month.
New orders 17.7 versus 17.9 last month.
Prices paid 41.4 versus 40.4 last month.
Prices received 24.2 versus 29.2 last month.
Number of employees 6.3 versus 4.5 last month.
Average employee work week 0.0 versus -4.5 last month
Capital expenditures 2.0 versus 6.7 last month.
Technology spending 5.1 versus 2.2 last month
New orders 17.7 versus 17.9 last month.
Shipments 12.6 versus 2.1 last month.
Unfilled orders -2.0 versus 0.0 last month.
Delivery time 4.0 versus -3.4 last month
inventories -11.1 versus -11.2 last month

US May NAHB Housing market index 45 vs 51 estimate

The US NAHB housing market index for May 2024

Prior month 51
NAHB housing market index 45 vs 51 estimate and 51 last month. The 2nd weakest level of the year (January was at 44)
Current single home sales 51 versus 57 in April
Home sales over next six-months 51 versus 60 in April
Prospective buyers 30 versus 34 in April

Comments from NAHB Members:

Carl Harris, NAHB Chairman:
- Market slowdown due to increased mortgage rates, pushing potential buyers to the sidelines.
- Concerned about new codes requiring HUD and USDA to insure mortgages for homes built to the 2021 International Energy Conservation Code, increasing construction costs.
Robert Dietz, NAHB Chief Economist:
- Lack of progress on reducing inflation has pushed long-term interest rates higher, dragging builder sentiment.
- The need to reduce shelter inflation by constructing more attainable, affordable housing.
Home Prices and Sales Incentives:
- 25% of builders cut home prices in May to boost sales, ending a four-month decline in price reductions.
- Average price reduction held steady at 6% for the 11th straight month.
- Use of sales incentives increased to 59% in May from 57% in April.

Looking at the three-month moving averages for regional HMI scores that the:

Midwest increased three points to 49,
Northeast fell two points to 61,
South dropped two points to 49 and the
West posted a four-point decline to 43.

US Business inventories for March fell -0.1% vs -0.1% estimate

US business inventories for March 2024
Prior month revised to 0.3% from 0.4%
Retail inventories ex autos fell -0.2% versus 0.3% last month

US MBA mortgage applications w.e. 10 May +0.5% vs +2.6% prior

Latest data from the Mortgage Bankers Association for the week ending 3 May 2024

Prior +2.6%
Market index 198.1 vs 197.1 prior
Purchase index 141.7 vs 144.2 prior
Refinance index 499.9 vs 477.5 prior
30-year mortgage rate 7.08% vs 7.18% prior

Feds Kashkari: Fed is focused on underlying demand to bring inflation down

Feds Kashkari speaking

Fed is focused on underlying demand in the economy to get inflation down.
Americans have been spending more than at one have expected.
Housing is an area very focused on.
The big question now is how restrictive is the current Fed policy
We probably need to sit here for a while longer to figure out where inflation is headed.
Fed’s balance sheet runoff is going well
Fed is committed to 2% inflation goal
With higher US government debt, it might take higher borrowing costs in the near term to achieve 2% inflation.
His view is that Bitcoin has little practical use.Not an investment vehicle or a currency
Reiterates skepticism for the value of central-bank digital currency

Fed’s Schmid says inflation is still too high, Fed has more work to do

Kansas City Federal Reserve Bank President Jeffrey Schmid, speaking at the regional bank’s agricultural summit:

Policy is in the correct place
Continued vigilance, flexibility are necessary
Prepared to be patient as inflation eases back toward 2%
Inflation expectations remain relatively low and anchored
Inflation is still too high, Fed has more work to do
Interest rates could remain high for some time
Labor market has come off a historic boil by many measures
There are signs that imbalances driving inflation are easing
Fed must preemptinflation from becoming ingrained
Fed’s job oninflation is made easier by supply increases
My preference is toshrink Fed’s balance sheet as much as possible, consistent withoperating framework

Q&A now:

I don’t think we should have slowed the balance sheet runoff
Whatever we don’t run off on the balance sheet we should reinvest in short-term treasury debt
We need room on the Fed’s balance sheet, which is a monetary tool
Productivity growth can moderate inflation, in the long run can help get to 2% inflation
US dollar continues to be king
The them of this year’s Jackson Hole summit will be ‘The transmission of monetary policy’

Goldman Sachs on surging US debt – both sides need “more discipline in fiscal spending”

Urges not to take the USD reserve currency status for granted
GS’ Group President John Waldron has reiterated concerns, speaking in an interview with Bloomberg (gated)

US government should think that there’s an insatiable appetite for US debt
“There’s no evidence we cannot just keep going, but those of us who have been watching this for a long time are worried this is an unsustainable pace”
“We need to show more discipline in the system should the US continue to be a great place to invest.”
there is a need to stimulate some parts of the economy but, Republicans and Democrats need to find a way to create more discipline in fiscal spending

US Yellen says new tariffs on China won’t result in significant price rises in the US

US Treasury Secretary Yellen speaking on PBS

US President Biden has announced a near quadrupling of tariffs on Chinese EVs (amongst other imposts on Chinese imports). While US demand for Chinese EVs is not large, for those buying them the price impact will be significant.

Fed’s Mester says not eager to consider interest rates hikes

Loretta Mester, president and CEO of Federal Reserve Bank Cleveland branch – Wall Street Journal interview

Says Fed in ‘really good place’ to study economy before charting rate path
She isn’t eager to consider interest-rate hikes
It was appropriatefor the Fed to hold rates steady as it awaits evidence that pricepressures are easing further
It’s too early to really conclude that we stalled out or that inflation is going to reverse
There are definite signs that the real side of the economy is moderating, and that is helping to bring balance back to the economy
Says long-run measures of inflation expectations appear to be “reasonably well anchored” at levels consistent with the Fed’s 2% goal

Canada March manufacturing sales -2.1% versus -2.6% expected

Canada manufacturing sales for March
Prior was +0.7%

Canada April housing starts 240.2K vs 238.0K expected

Canada housing starts data for April 2024
Prior was 242.2K (revised to 242.3K)
Starts vs -1.6% prior

Royal Bank of Canada has cut its forecast for the Canadian Dollar

Citing BOC / FED diverging rate paths

Royal Bank of Canada has cut its forecast for the Canadian Dollar, citing the diverging path for interest rates in Canda vs. the US. More on that to come, but first the projections:

USD/CAD to 1.37 by end June 2024
1.3850 by end September
1.40 by year-end
And to a peak of 1.42 by mid-2025

Comments:

still see the BoC delivering four consecutive cuts this year and another -100bps in 2025
first Bank of Canada rate cut expected next month, June 2024,RBC analysts are eyeing the May 21 release of Canadian inflation data: “A BoC June rate cut is not fully priced and that may serve as a small headwind to CAD”
first Federal Reserve rate cut expected in December 2024

Commodities

Gold Shines Bright: Surges to Three-Week High on Inflation Relief, Fueling Rate Cut Speculation

Gold price hits $2,390, its highest level in three weeks, gaining over 1%.
April Retail Sales stagnate, while Fed officials express concerns about restrictive monetary policy.

Gold extended its uptrend for the second straight day on Wednesday and hit a three-week high of $2,390 after data showed inflation is ebbing, increasing the odds for a Fed rate cut in 2024.

The yellow metal trades at $2,384 and gains more than 1%. Despite standing above 3% on an annual basis, consumer inflation slowed in monthly figures, easing pressure on the Fed.

US crude oil settles at $78.63

Up $0.61 or 0.80%

Crude oil futures are settling at $78.63.At up $0.61 or 0.80%.

The high price today reached $78.80. The low price was at $76.70. The low price traded to the lowest level since February 27 before bouncing higher.Technically the price is closing back above its 100-day moving average at $78.48.Despite moves above and below that moving average, momentum to the downside starts, but cannot be maintained.

OPEC likely to hold its June 1 oil policy meeting online – report

Reuters report, citing four sources

This report is likely behind at least some of the turn higher in oil.

The thinking with an online meeting is that it’s likely to be far-less contentious and that a rollover of the current voluntary cuts is already baked in.

EIA weekly US oil inventories -2508K vs -543K expected

Weekly US oil inventory data
Crude -2508K vs -543K exp
Gasoline -235K vs +537K exp
Distillates -45K vs +824K exp
Production 13.1mbpd vs 13.1 mbpd prior
Refinery utilization +1.9% vs +0.7% exp
Cushing: -0.341M

Private survey of oil inventories shows larger headline crude draw than was expected

Details from the inventory data from the private survey

Crude -3.104 million (exp. +1 million)
Gasoline -1.269 million
Distillates +349,000
Cushing -601,000
SPR +600,000

EU News

Eurozone March industrial production +0.6% vs +0.5% m/m expected

Latest data released by Eurostat – 15 May 2024

Prior +0.8%; revised to +1.0%

The details show an increase in capital goods (+1.0%) but that was offset by a decrease in intermediate goods (-0.5%), energy (-0.9%), durable consumer goods (-1.1%), and non-durable consumer goods (-2.7%).

Eurozone Q1 GDP second estimate +0.3% vs +0.3% q/q prelim

Latest data released by Eurostat – 15 May 2024
Prior 0.0%; revised to -0.1%

France April final CPI +2.2% vs +2.2% y/y prelim

Latest data released by INSEE – 15 May 2024

Prior +2.3%
HICP +2.4% vs +2.4% y/y prelim
Prior +2.4%

ECB’s Rehn: Rates can be cut if confidence on inflation progress continues to strengthen

Remarks by ECB policymaker, Olli Rehn

In his words: “If the confidence that inflation is approaching its target in a sustainable manner continues to strengthen, the restrictiveness of monetary policy can be reduced – that is rates can be reduced in plain English.”

ECB’s Müller: A June rate cut is very probable

Remark by ECB policymaker, Madis Müller
But other moves for the rest of the year are more complicated

Asia-Pacific-World News

China’s government is considering buying unsold homes to ease oversupply

Bloomberg with the info, not a lot of detail at this stage

The plan is still in early stages of development.

China’s central government (State Council) is encouraging feedback from regional authorities on what is said to be a large-scale plan:

local governments would buy “millions” of unsold homes says the report

People’s Bank of China 125bn yuan of 1 year Medium-term Lending Facility (MLF), 2.5%

Rate unchanged at 2.5%

The MLF rate setting sets the scene for the Loan Prime Rate (LPR) setting coming up on the 20th.

The unchanged rate, at 2.5%, for the MLF strongly suggests the one- and five-year LPRs will remain at the same rates also:

3.45% and 3.95% respectively

Australia data – Wage Price Index for Q1 2024: +0.8% q/q (expected +0.9%)

Australian wage rises miss estimates and lower than prior … still though, not falling away rapidly

Wage Price Index (Q1) +4.1% y/y

expected 4.2%, prior 4.2%

and +0.8% q/q

expected 0.9%, prior 0.9%

The y/y result compares well with Australian budget forecast of 4% growth this year, and the RBA’s forecast of 4.2%.

Reserve Bank of New Zealand monetary policy meeting preview – on hold expected

RBNZ dealing with persistent inflation

Via Westpac, in summary points:

We expect the RBNZ will leave the OCR at 5.5% at its May Monetary Policy Statement.
The RBNZ will likely remain comfortable with the forward outlook communicated in the February Monetary Policy Statement.
We don’t see a significant change in the RBNZ’s projections for the OCR – easing still looks like a 2025 affair.
Weaker than expected GDP growth and numerous indications of a flat economy should trigger a downward adjustment in the 2024 growth profile.
But the inflation outlook remains challenging as a non-tradables driven upward inflation surprise in Q1 2024 likely implies a still elevated near-term inflation outlook.
Market views of OCR easing as early as October are unlikely to find support.

Asian market holidays today, Wednesday, 15 May 2024 – Hong Kong closed

And South Korea

Markets in Hong Kong are closed today for the public holiday, Birthday of the Buddha.

Cryptocurrency News

Bitcoin Surges Beyond $65,000, Unveiling an Intriguing Chart Pattern for Investors

Bitcoin up 5% today

Bitcoin is having its best day in two weeks, climbing 5% as part of a broad rally in global risk assets.

The chart may be tracing out an inverted head-and-shoulder pattern, one that would target a move to $75,000. A speculative fever may have been unleashed by the drama in Gamestop and AMC this week, along with the improving prospects for Fed rate cuts. I worry that we may have baked too much of that in already but it’s tough to go against the trend.

The rally over the past week also adds confidence that the early-May drop was a false breakout. The $60,000 level held this week as it had several times in March and April.

North Korea laundered $147.5 mln in stolen crypto in March

Stolen from HEX

Reuters cite confidential work by United Nations sanctions monitors it has sighted.

North Korea laundered $147.5 million through virtual currency platform Tornado Cash in March
After stealing it last year from a cryptocurrency exchange, HTX

United Nations sanctions monitors add:

They had been investigating 97 suspected North Korean cyberattacks on cryptocurrency companies between 2017 and 2024, valued at some $3.6 billion
In 2024 alone, the monitors said they had been looking at “11 cryptocurrency thefts … valued at $54.7 million”

ETH could see a short-term bull run, SEC faces several hurdles in attempts to deny spot Ethereum ETFs

Recent data showing Ethereum Mainnet underperformed Solana in terms of revenue sparks heated debate about ETH’s long-term value.
There’s no legal path for SEC to deny spot ETH ETF, says Nate Geraci.
Ethereum could be on verge of attempting short-term bull run.

Ethereum (ETH) is looking to attempt a short-term bull run on Wednesday after breaking out from a five-day horizontal movement. Reduced revenue in ETH Mainnet and the Securities & Exchange Commission’s (SEC) potential decision on spot ETH ETFs have also sparked debate in the crypto community.

ETH L2s, spot Ethereum ETF analysis

Ethereum Layer 2s and spot ETH ETFs are trending among crypto investors. Here are market movers for the largest altcoin:

A recent X post on Tuesday by Dan Smith, an analyst at Blockworks, sparked debate among Ethereum community members. Smith shared a post indicating Solana generated more revenue — $2.24 million — from transaction fees and maximum extractable value (MEV) than Ethereum — $1.97 million — on May 12.
However, many argued that the data shared by Smith didn’t include fees captured by Ethereum Layer 2s, which form part of the broader Ethereum ecosystem. Ethereum community member Ryan Berckmans argued that the decline in MEV and transaction fees isn’t a bearish signal for Ethereum but an indication of improving user experience.
He mentioned how recent Ethereum upgrades have shifted most activity to L2s and hence caused an increase in blockspace supply and a subsequent reduction in fees. He also cited Ethereum’s slow price growth in the recent bull cycle as a reason for the revenue reduction.
Berckmans argued that Ethereum’s value will come from being “the world’s economic hub and not based on fees/mev.” Other community members expressed concerns that high-value transactions moving to L2s won’t accrue any value to the ETH Mainchain and, as a result, would affect its price.

Meme coin PEPE resists decline despite mass profit taking by whale

A whale took profits on PEPE, selling 1.41 trillion tokens within one month of buying the meme coin.
PEPE whales realized over $61 million in profits this week.
PEPE price advanced on Wednesday despite whales selling.

PEPE, an internet frog-meme inspired token, has seen a spike in profit-taking activity by traders.PEPE holders have consistently realized gains in the meme coin since April 30, as seen on on-chain activity tracker Santiment.

PEPE price has resisted decline despite the rising selling pressure on the asset.

PEPE resists decline despite mounting selling pressure

Data from crypto intelligence tracker Lookonchain shows that a whale spent $3,000 to buy 4.9 trillion PEPE tokens (worth $56 million now) on April 15, 2023.The whale realized profits on 1.41 trillion PEPE tokens and has another 3.5 trillion tokens left in their wallet. The large wallet investor realized $7.4 million in profits.

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Round up of today’s market news

ByBilals Tech