North American News
NASDAQ and S&P close lower for the second consecutive day
- Dow Industrial Average squeaks out a small green
After the close the Tesla investor day will take place and could determine the early bias for tomorrow’s trade. Focus will be on a lower price models, a Mexican plant and its details, and driving down the costs. Annual deliveries in 2022 came in at 1.31 million vehicles. That is up from 936,172 in 2021
The final numbers are showing:
- Dow Industrial Average rose 5.86 points or 0.02% at 32662.57
- S&P index fell -18.56 points or -0.47% at 3951.60
- NASDAQ index fell -76.05 points or -0.66% at 11379.49
- Russell 2000 rose 1.443 points or 0.08% at 1898.43
US 10-year note yields touch 4% after hot prices data in the ISM manufacturing survey
- Yields up 6.9 bps
Risk trades have stumbled and the US dollar rallied after US 10-year yields touched 4% in the aftermath of the ISM manufacturing survey. It came after the prices paid component of the survey surprised with a rise to 51.3 compared to 45.1 expected and well-above the 44.5 prior.
The numbers indicate that input costs of manufactured goods rose, despite falling oil and natural gas prices in the month.
US Feb ISM manufacturing 47.7 vs 48.0 expected
- US February 2023 manufacturing survey from the ISM
- Prior was 47.4
- Prices paid 51.3 vs 45.1 estimate. Last month 44.5
- Employment 49.1 vs. 50.6 prior
- New orders 47.0 vs. 42.5 last month
- Production 47.3 vs 48.0 last month
- Order backlog 45.1 vs. 43.4 last month
- New export orders 49.9 vs. 49.4 last month
- Imports 49.9 versus 47.8 last month
US construction spending for January -0.1% versus 0.2% expected
- Construction spending for January 2023
- Prior month -0.4% revised to -0.7%
- construction spending for January -0.1% versus -0.7% last month
- total construction spending came in at $1825.7 billion versus $1827.5 billion in December
- private construction 0.0% % versus -0.4% last month
- residential construction -0.6% vs -0.3% last month
- nonresidential construction 0.9% vs -0.5% last month
- Public construction -0.6% MoM
US S&P Global final February manufacturing PMI 47.3 vs 47.8 prelim
- The final reading on February from S&P Global
- Prelim was 47.8
- January final was 46.9
- The rate of inflation accelerated for the second month
- Fastest job growth in five months
- New orders fell further
- Lower sales attributed to destocking
- New export orders down for 9th month
Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, said:
“US manufacturing remained under intense pressure in February. Although the PMI rose slightly, it continues to signal the steepest downturn outside of pandemic lockdown months since 2009. “Moreover, some of the improvement in output could merely be attributed to faster supplier delivery times, which quickened to the greatest extent since 2009 to facilitate higher production and enable factories to work through previously placed orders. The worry is that new order inflows continue to fall sharply as many companies report disappointing sales, linked in part to a sustained trend towards cost-saving inventory reduction and low levels of confidence at their customers, both at home and abroad. None of this points to a healthy economic situation. There was some brighter news in that factory jobs growth picked up slightly amid reports of greater success in filling vacancies, and the improvement in supply chains helped reduce input cost inflation. However, rising wage pressures and efforts to raise margins meant average prices for goods leaving the factory gate rose sharply once again, the rate of inflation accelerating for a second straight month to hint at stubbornly high price pressures.”
Atlanta Fed GDPNow dips to 2.3%
- Fall from 2.3%
The Atlanta Fed GDPNow estimate for 1Q growth has dipped to 2.3% from 2.8% previously. In their own words:
The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2023 is 2.3 percent on March 1, down from 2.8 percent on February 27. After recent releases from the US Census Bureau and the Institute for Supply Management, the nowcasts of first-quarter real gross private domestic investment growth and first-quarter real government spending growth decreased from -5.1 percent and 2.0 percent, respectively, to -6.1 percent and 1.5 percent, respectively, while the nowcast of the contribution of the change in real net exports to first-quarter real GDP growth decreased from 0.82 percentage points to 0.60 percentage points.
Fed’s Kashkari: Inflation is not yet being driven by the labor market
- Comments from Kashkari in Sioux Falls
- Inflation is very high and the Fed’s job is to bring it down to 2%
- We would like to avoid recession but getting inflation down is top job
- Says he’s open-minded on 25 bps vs 50 bps at next meeting but says signals in dot plot more important
- Kashkari is a voter at the March 22 meeting
- I lean to continue to push up my policy path versus December
- I don’t overreact to one month of data
In early Feb, Kashkari said his dot was around 5.40% so this would be breaking the 5.5% peak. It’s a hawkish comment.
Commodities
Silver holds the fort at $21.00 despite UST yields continuing to rise
- Silver price holds to its earlier gains but remains at risk, of closing the session below $21.00 a troy ounce.
- US ISM Manufacturing PMI missed estimates, though it showed some improvement.
- Federal Reserve officials emphasized the need to raise rates to the 5.25% – 5.50% area.
Silver price advances in the North American session after finding resistance above the $21.00 area, though it clings to gains of 0.33%. Bolstered by a softer US Dollar (USD) after United States (US) data missed estimates, the white metal is extending its gains for two straight days. At the time of writing, the XAG/USD trades at around $20.90s.
WTI crude oil futures settled at $77.69
- Up $0.64 or 0.83%
WTI crude futures are settling the day at $77.69. That’s up $0.64 or 0.83%.
Looking at the daily chart, the price is trading in a wedge or triangle.. The upper extreme is near $78.64. The lower extreme is at $73.27.
EIA weekly crude oil inventories +1165K vs +457K expected
- US petroleum inventory data
- Prior was +7648k
- Gasoline -874K vs +464K expected
- Distillates +179K vs -462K expected
- Refinery utilization -0.1% vs -0.4% expected
EU News
Germany February preliminary CPI +8.7% vs +8.5% y/y expected
- Latest data released by Destatis – 1 March 2023
- Prior +8.7%
- CPI +0.8% vs +0.6% m/m expected
- Prior +1.0%
- HICP +9.3% vs +9.0% y/y expected
- Prior +9.2%
- HICP +1.0% vs +0.7% m/m expected
- Prior +0.5%
ECB’s Nagel: Significant hikes beyond March are necessary
- Comments from the Bundesbank leader
- ECB must be more stubborn than inflation
- APP rolloffs could rise to 20 billion/month
- I am much more at ease with the market’s perception of the ECB’s role
Other News
Germany’s central bank posts first loss since 1979
- The Bundesbank sees its first annual loss in over four decades
This of course comes after the ECB itself reporting a €1.6 billion loss just last week here. The Bundesbank itself is posting a €172 million loss for the year 2022, but this is covered by provisions accumulated over the years.
Much like the ECB, the German central bank is paying the price for rate hikes as that contributed to the reduction of value of its bond holdings. With inflation being sticky and rates staying higher, further losses are likely and raises just a tiny bit of doubt on buffers at the central banks in Europe.
Einhorn on CNBC: Still think we should be bearish on stocks
- David Einhorn of Greenlight Capital
David Einhorn on CNBC says:
- Still thinks we should be bearish on stocks
- Adds that investors should be bullish on inflation
- Thinks both long and short-term rates are heading higher and probably higher than what people are expecting
- The Fed does want stock prices lower
- He is very bullish on copper
- company specific he likes Tenet Healthcare (THC), CONCOL Energy (CEIX) and still owns Teck Resources (TECK)
Cryptocurrency News
Will Visa and Mastercard’s retreat from crypto drive adoption of Crypto.com, Coinbase cards?
- US payment giants Visa and Mastercard halted their plans to forge new partnerships with crypto firms after a string of collapses within the ecosystem.
- Throughout 2022, the crypto industry witnessed a reversal of fortunes with billions of dollars being wiped out of the industry in the Terra LUNA and FTX collapse.
- Visa and Mastercard’s decision to roll back their crypto partnership plans could pave the way for wider adoption of Crypto.com and Coinbase cards.
US payment giants Visa and Mastercard have decided to push back the launch of crypto-based products and partnerships within the ecosystem. In 2022, crypto witnessed massive collapses and bankruptcies like Terra-LUNA implosion and FTX’s bankruptcy.
The decision of the payment giants could however drive the adoption of crypto cards by Crypto.com and Coinbase. This could boost the utility of CRO, the native token of Crypto.com.
Visa and Mastercard slam the brakes on their crypto plans
The world’s two-largest payment card processors, Visa and Mastercard slammed the brakes on their plans for crypto-based products and launches. The $42 billion implosion of Terra’s sister tokens LUNA-UST and FTX exchange’s bankruptcy, sent shockwaves through the crypto ecosystem.
In response to the events of 2022, capital from institutional and retail investors left the crypto ecosystem, negatively influencing the total market cap of crypto and prices of digital assets. The sentiment in the crypto community turned bearish with the events.
Visa and Mastercard, the two US payment giants that were making strides in inclusion of digital assets in the financial landscape, decided to stall their plans after 2022’s events. Sources close to the matter told Reuters of this development, the two payment giants are focused on blockchain technology but unsure of cryptocurrency’s inclusion in their future plans, for 2023.
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