North American News
No fear of the Fed. US stocks surge late
- Closing changes for the main market indexes
Futures were solidly negative ahead of the close but softer US wage growth data turned the mood and some month-end considerations may have helped as well.
- S&P 500 up 55 points, or 1.4%
- Nasdaq up 1.7%
- Russell 2000 up 2.1%
- DJIA up 1.0%
- Toronto TSX Comp +0.7%
US employment cost index for Q4 1.0% vs 1.1% estimate
- US employment cost index for the 4Q of 2022
- Employment cost index for Q4 1.0% vs 1.2% last quarterly
- Wages 1.0% vs 1.3% last quarter
- Benefits 0.8% vs 1.0% last quarter
- In 2022 employment costs rose 5.1% YoY versus 4.0% in 2021
- Wages increased by 5.1% YoY versus 4.5% in 2021
- Benefits increase 4.8% YoY versus 2.9% in 2021
US January Conference Board consumer confidence 107.1 versus 109.0 expected
- US Conference Board consumer confidence for January 2023
- Prior report was 108.3
- Present situation index 150.9 vs 147.2 prior
- Expectations index 77.8 vs 82.4 prior
- 1 year inflation 6.8% vs 6.7% prior (prior revised to 6.6%)
- Jobs hard-to-get 11.3 vs 11.9 prior
Dallas Fed January service sector outlook -15.0 vs -19.8 prior
- Data from the Federal Reserve Bank of Dallas
- Prior was -19.8
- Revenue index vs -0.6 prior
GM move invest in lithium mine highlights supply angst on green transition minerals
- GM takes 10% stake in Lithium Americas
General Motors today announced it will invest $650 million in a US lithium mine in order to secure the materials for its batteries. That includes $320 million this year for the rights to the first stage of lithium production at the Thacker Pass mine owned by Lithium Americas and a $330 million later on that includes 10% of the company’s shares.
“It’s a landmark transaction, and it certainly won’t be the last major supply chain announcement for GM,” chief executive Mary Barra said.
Commodities
Gold’s time has come in a pivotal chorus of events
- Gold price is testing the bull’s commitments into highly important events for the rest of this week.
- Gold bears are waiting to pounce, chipping away at critical support structures.
- Federal Reserve and European Central Bank meetings will start off the chorus of expected volatility before the showdown, Nonfarm Payrolls.
Gold price had given two-way business on Tuesday as markets get set for the Federal Reserve, Fed, at month-end making for a particularly choppy day. However, the Gold price is headed for a third straight monthly gain, with the US Dollar and bond yields weakening despite higher interest rates expected from this week’s meetings of the Federal Reserve’s policy committee.
Additionally, the European Central Bank and Bank of England are expected to hike rates by 50 basis points on Thursday.
Silver reclaims the 20/50-day EMAs, holds to gains around $23.70
- Silver is trapped within the 20 and 50-day Exponential Moving Averages, trendless.
- Silver Price Analysis: Sideways but slightly tilted upwards, with buyers eyeing $25.00.
Silver price extended its consolidation around the $23.00-$24.50 during the week, capped by the 20 and 50-day Exponential Moving Averages (EMAs), and remains unable to break the range decisively. However, XAG/USD erased some of its earlier losses and shifted positively in the day, trading at $23.71, gaining 0.53%.
OPEC production fell 50K bpd in January – survey
- The latest secondary sources survey from Reuters
- January output falls 50K bpd from December to 28.87 million barrels per day
- Members complied with quota cuts at 172% vs 161% in December
- Members undershoot Jan output target by 920k bpd vs 780k bpd in December
Iraq had a fresh production decline in January, according to the survey.
WTI crude oil gains nearly a $1. Sceptical eyes on private inventory data
Today it’s something of the opposite with oil looking like it was breaking down, only to reverse in North American trade and settle 91-cents higher to $78.83.
If the today’s data is bullish, I would be very wary of chasing it. In any case, oil is going to be in a tough spot in the next 24 hours with EIA data to follow the private numbers and then the FOMC decision at 2 pm ET on Wednesday.
EU News
European equity close: A bounce back to flat after early losses
- Closing changes in Europe
Stocks were down big early and there’s good reason for worry after German retail sales cratered but the bulls showed a lot of strength in buying the dip.
- Stoxx 600 -0.2%
- German Dax, flat
- France’s CAC, +0.1%
- UK’s FTSE 100 -0.1%
- Spain’s Ibex -0.2%
- Italy’s FTSE MIB +1.0%
Other News
FOMC to hike 25 bps on Wed and Powell to stick to 5.1% peak – Barclays
- Barclays FOMC preview
Barclays Research discusses its expectations for this week’s FOMC policy meeting.
“As is widely anticipated, we expect the FOMC to again slow the pace of hikes, raising the target range by 25bp to 4.5-4.75%. Such a move would be in line with pre-blackout FOMC communications and supported by accumulating evidence that inflation and wage growth are decelerating, and signs of a slowing economy. In the face of these data, market expectations see the funds rate topping out in a range of 4.75-5.00% this spring, and an initiation of rate cuts as early as July,” Barclays notes.
“However, the FOMC’s work is not yet done, even if the recent declines in inflation and wage growth give it more time to assess the effects of past policy actions. A key challenge for the FOMC will be to execute its transition to smaller rate hikes without furthering expectations that an end to its hiking cycle is imminent. The post-meeting press conference should be particularly interesting in that respect. We expect Powell to signal a peak rate of 5.1% in 2023, possibly by mentioning that last December’s dot plot by the FOMC remains appropriate,” Barclays adds.
Xi expected to visit Moscow near the anniversary of Ukraine war
- Beijing is yet to confirm the trip
Earlier today, Russian officials announced that Xi would soon be visiting Moscow.
The trip could coincide with the Feb 24 anniversary of Russia’s war on Ukraine, though Beijing has yet to confirm the visit.
“This year, Russia and China will join efforts to enhance and promote further bilateral relations between the two governments,” Russia’s state-owned news agency TASS said, citing the foreign ministry.
“As you know, [Putin] has invited [Xi] on an official visit this spring. We proceed from the understanding that this will be the central event in the bilateral agenda for 2023,” the ministry said.
China is under pressure to distance itself from Russia but appears to be defiant.
Cryptocurrency News
US SEC accepts LBC token is not a security, renews hope of Ripple’s win in XRP community
- The US Securities and Exchange Commission has settled its lawsuit against LBRY Inc. and accepted that the token in itself is not a security.
- Attorney John Deaton cited a paper by contract attorney Lewis Cohen and persuaded the judge that secondary market transactions of LBC were not securities.
- Experts in the XRP community believe the SEC’s remarks could help ensure Ripple’s win in the lawsuit brought by the financial regulator.
US financial regulator settled its case against LBRY Inc making XRP holders in the Ripple community hopeful. Since the case brought by the Securities and Exchange Commission against LBRY Inc. was similar to its lawsuit against payment giant Ripple, XRP Army monitored the results closely.
US SEC settles case against LBRY Inc
Ripple community considers SEC’s settlement in its lawsuit against LBRY Inc. a victory for the entire crypto industry. Attorney John Deaton, the founder of media outlet CryptoLaw represented tech journalist Naomi Brockwell as an amicus curiae, and sought clarity for LBC secondary market transactions.
Deaton believed that the injunction was ambiguous and broad. As an individual that is not a party to the case but is permitted to assist a court by offering information and expertise, Deaton cited a paper by commercial contract attorney Lewis Cohen that examined all security lawsuits in the U.S. since the SEC vs. W.J. Howey Co case.
No court acknowledged that the underlying asset was security at any point throughout Cohen’s examination of security cases in the US. Deaton’s argument persuaded the judge that LBC’s secondary market transactions were not securities.
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