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North American News

US stocks close mixed. Down for the week

  • Dow industrial average lower. NASDAQ index higher

The major US stock indices are closing the day with mixed results:

  • Dow industrial average is down -38.31 points or -0.13% at 29888.79
  • S&P index is up 8.09 points or 0.22% at 3674.85
  • NASDAQ index is up 152.26 points or 1.42% at 10798.36
  • Russell 2000 is up 15.85 points or 0.96% at 1665.69

Some details for the day:

  • Major indices are down for the 3rd straight week
  • The Dow was down -274 point at the session low
  • The S&P was down -29.95 points at the session lows
  • The Nasdaq was down only -7.3 points that the session lows
  • NASDAQ index trades -33.4% below its record high
  • S&P is -23.7% below its record high
  • Dow is down -19.12% below its record high. At the lows week the Dow industrial average was down -19.75% from its all-time high just short of bear market territory.
  • The NASDAQ index closed just above its 200 week moving average at 10795.92 averting the first close below that level since the week of March 16.

For the week:

  • Dow industrial average fell -4.7%
  • S&P index fell -5.78%
  • NASDAQ index-4.68%
  • Russell 2000 fell -7.48%

US May leading indicators -0.4% vs -0.4% expected

  • US May leading indicators data from The Conference Board

This report is a composite index of data that’s already been released so it doesn’t tell us anything new but it’s useful as a broad look at the direction of the economy.

Prior was -0.3%


Commodities

Gold Price Forecast: XAUUSD drops below the 200-DMA at around $1830s

  • The gold spot is falling due to broad US dollar strength and steady US real yields.
  • US Industrial Production expànded at a lower rate than in April, showing that the US economy is slowing.
  • Gold Price Forecast (XAUUSD): To consolidate amid the lack of a catalyst.

Gold spot (XAUUSD) drops courtesy of a buoyant greenback, which is staging a comeback after printing losses of 1% on Thursday, trimming some of those despite that US Treasury yields fall for the second straight day in the week. At the time of writing, XAUUSD is trading at $1839.20 and losses 0.97%.

US Real yields remain steady, weighing on Gold Prices

Sentiment remains positive as US equities recover some ground. The US Dollar Index, a measure of the buck’s value, advances 0.83%, sitting at 104.666. in the meantime, the US 10-year Treasury yield drops to 3.229%, for a loss of seven basis points.

In the meantime, US 10-year TIPS (Treasury Inflation-Protected Securities), a proxy for real yields, is down one basis point, sitting at 0.665%, a headwind for the yellow metal.

Elsewhere, the US economic calendar featured May’s Industria Industrial Production, which expanded by 5.8% YoY, lower than April’s reading at 6.3%, adding signs of an economic slowdown. “The pace at which everything is changing is quite alarming,” according to WSJ sources. They said that the economy still stands on fairly solid ground to withstand inflation, supply-chain issues, and rising interest rates.

Earlier in the day, the Minnesota Fed’s President Neil Kashkari commented that he supported 75 bps in June and could support another in July. He added that a prudent strategy might be to continue with 50 bps increases. St. Louis Fed President James Bullard said a soft landing is feasible if the post-pandemic shift is done well.

Gold Price Forecast (XAUUSD): Technical outlook

The XAU/USD is in consolidation amidst the lack of a catalyst that could propel the yellow metal prices either way. At the time of writing, XAU/USD sits below the 200-day moving average (DMA), which lies at $1843.48. That would open the door for consolidation in the $1800-$1850  range, where the non-yielding metal remained throughout the last week.

A daily close of XAU/USD beneath the 200-DMA would expose the Jun 1 daily low at $1828.33. A break below would open the door for a May 18 test at a $1807.23 cycle low. Once broken, a fall to $1800 is next.

Upwards, XAU/USD’s first resistance would be the 200-DMA. If XAU bulls achieve a daily close above it, a move towards the 50-DMA at $1874.80 is on the books. Once cleared, the XAU/USD following resistance level would be the 100-DMA at $1891.92.

WTi crude oil settles at $107.99 for August delivery

  • Down -$7.26 on the day

The price of WTI crude oil is settling -$7.26 lower at $107.99. That is for the August contract.

For the July contract has its last day of trading on June 21. It settled at $109.56 down -$8.03 or -6.83%.

The move lower has been helped by the stronger dollar, but is also be reflective of a falling of global demand. Industrial production was weaker than expected today. The housing market is under pressure as higher rates and prices start to sap demand. People are starting to feel the pain from stocks declining, inflation sapping purchasing power, and the potential for a decline in housing prices as well. The employment cycle is transitioning from hiring, to not hiring, to cutting jobs in certain industries. Employment is a lagging indicator, but it is showing some signs of a slowdown.

Driving is a necessity for many, but on the margin, if driving can be cut back to squeeze an extra few days or so for some, and a week for others, it will be done.


EU News

Major European indices end the day mostly higher (UK FTSE100), but lower for the week

  • Sharp declines for the week

The major European indices are ending the day with modest gains/changes. The exception is the UK FTSE 100 which fell -0.41% the day. However for the week, all the indices are down sharply.

The final numbers for the day are showing:

  • German DAX, +87.77 points or 0.67% at 13126.27
  • France’s CAC, -3.59 points or -0.06% at 582.66
  • UK’s FTSE 100 -28.73 points or -0.41% at 7016.26
  • Spain’s Ibex +67.8 points or 0.84% at 8145.91
  • Italy’s FTSE MIB up 0.43%

For the trading week:

  • German DAX, -4.7%
  • France’s CAC -4.8%
  • UK’s FTSE 100 -4.0%
  • Spain’s Ibex -3.0%
  • Italy’s FTSE MIB -3.2%

Other News

Putin: Restoration of relations with Ukraine is inevitable

  • Russian Pres. Putin speaking
  • restoration of relations with Ukraine is inevitable
  • ready to restore relations with everyone after military intervention in Ukraine

Earlier today, Putin proclaimed:

  • nothing will be as it used to be when it comes to global politics
  • EU could lose over $400 billion due to sanctions against Russia
  • the nation is able to increase its exports of grains and fertilizers
  • it is important to increase food supply on the global market
  • deficit and fertilizers could move food prices even higher
  • he hopes the cash flows will increase via new routes soon

Cryptocurrency News

Coinbase exec says more job cuts cannot be ruled out should the crypto selling continue

  • Comments come after laying off 18% of staff this week

Coinbase announced it laid off 1,100 employees this week and rescinded 300 job offers. The action was reported to be 18% of the staff.

Now. a Coinbase CEO is on the wires saying further job cuts cannot be ruled out should the Crypto selling continues.

Wired magazine had recent article where it cited a memo from Sequoia, the venture capital firm saying:

IN MAY, THE venture capital firm Sequoia circulated a memo among its startup founders. The 52-page presentation warned of a challenging road ahead, paved by  inflation , rising interest rates, a Nasdaq draw down, supply chain issues, war, and a general weariness about the economy.Things were about to get tough, and this time, venture capital would not be coming to the rescue. “We believe this is a Crucible Moment,” the firm’s partners wrote. “Companies who move the quickest and have the most runway are most likely to avoid the death spiral.”

Those are strong words for the plethora of startups, SPACs, etc. that used the free money from the Covid bailout to tap venture capital money and lead the lambs to slaughter without earnings to back it up.

The price of bitcoin is trading at $20512 currently after reaching a low of $20220.16 today and a high of $21325.06. The price is looking to end the week below the 200 week MA at $22354.79. The price is down -70% from its November 2021 high and trades at the lowest level since the week of December 14, 2020.

Reports that crypto hedge fund Three Arrows Capital is facing $400 mn in liquidations

Earlier in the week we had reports of trouble at the Singapore based hedge fund:

  • Speculation that a crypto-focused Singapore-based hedge fund is insolvent
  • After $400 million in liquidations, a major hedge fund in the space, Singapore-based Three Arrows Capital, or 3AC, is reportedly facing insolvency, and many domino’s look likely to fall next.
  • 3AC’s lenders continue to come forward as the fund, which managed $10 billion in assets in March, according to blockchain analytics firm Nansen, fails to meet margin calls and liquidates its cryptocurrency holdings, adding more downward pressure on the beleaguered market.