North American News
Major indices on three-day losing streak
- Dow Industrial Average leads the way to the downside
The major US stock indices are on a three-day losing streak to start the month of May. The Dow Industrial Average led the way to the downside, but it was regional banks that stole the show today.
The S&P regional bank index fell -5.56%. A look at some of the regional banks showed sharp declines across the board.
A snapshot of the closing levels shows:
- Dow industrial average fell -286.30 points or -0.86% at 33127.95
- S&P index -29.38 points or -0.72% at 4061.35
- NASDAQ index -58.94 points or -0.49% at 11966.39
Below are a list of the major earnings releases after the close:
- Bumble (BMBL) Q1 2023: Adj. EBITDA $59.3 million (expected $54.8 million), revenue $243 million (expected $241 million). Paying users 3.46 million (expected 3.44 million). ARPU $22.83 (expected $22.80).
Shares of Bumble are trading at $18.29 after closing at $17.64
- Monster Beverage Corp (MNST) Q1 2023: EPS $0.38 (expected $0.34), revenue $1.70 billion (expected $1.69 billion).
- Coinbase (COIN) Q1 2023: EPS -$0.34 (expected -$1.35), revenue $773 million (expected $654 million). Q1 trading volume $145 billion (expected $147.35 billion).
Shares of Coinbase are trading at $51.78 after closing at $49.22
- Lyft (LYFT) Q1 2023: EPS -0.50, revenue $1.00 billion (expected $977 million). Revenue per active rider $51.17 (expected $49.77). Active riders 19.6 million (expected 19.5 million).
Shares of LYFT are trading at $9.57 after closing at $10.69
- Fortinet Inc (FTNT) Q1 2023: Adj. EPS $0.34 (expected $0.29). Revenue $1.26 billion (expected $1.2 billion).
Shares of Fortinet are trading at $63.44 after closing at $61.18
- DoorDash (DASH) Q1 2023: Adj. GM 49.1% (expected 46.7%), revenue $2.04 billion (expected $1.92 billion). FY gross order value expected at $63-63.5 billion (expected $61.37 billion).
Shares of Doordash are trading at $65.56 after closing at $62.83
- Dropbox (DBX) Q1 2023: EPS $0.42 (expected $0.35), revenue $611 million (expected $601 million).
Shares of dropbox are trading at $20.66 after closing at $19.64
- Expedia Group Inc (EXPE) Q1 2023: Adj. EPS -0.20 (expected -0.04), revenue $2.67 billion (expected $2.66 billion).
Shares of Expedia are trading at $90 after closing at $89.17
- Booking Holdings Inc (BKNG) Q1 2023: Adj. EPS $11.60 (expected $10.61), revenue $3.80 billion (expected $3.77 billion). Gross bookings $39.43 billion (expected $35.89 billion).
Shares of a Booking Holdings are trading at $2451.72 after closing at $2603.57
Apple EPS $1.52 versus $1.43 estimate. Revenues $94.84B versus est of $92.97B
- Apple beats on the top and bottom line
- EPS $1.52 versus $1.43 expected
- revenues $94.84 billion versus $92.97 billion expected
- Gross margins 44.3% versus 44.1%
- Buybacks $90 billion as expected
- Dividend increases 4% to $0.24
- iPhone revenues $51.33 billion versus $48.84 billion estimate
- iPad revenues of $6.67 billion versus $6.69 billion expected
- Wearables home and accessories $8.76 billion versus $8.51 billion expected
- Services revenue $20.9 billion versus $21.1 billion estimate
- Mac revenues $7.17 billion versus $7.74 billion expected
US regional banks smoked again. PacWest in focus
- Bloomberg report puts it under the gun
Shares of PacWest Bancorp are down 46% today after a report late yesterday that the company was considering strategic alternatives.
The moves and TD walking away from a regional bank deal have caused a fresh run on the KRE regional bank ETF, which is down 6%. The usual suspects are at the bottom of the list, including a 20% drop in Western Alliance.
At this point, it’s tough to see anyone drawing a line under this unless someone comes in with a hammer and buys one of these regional banks for a premium. But why would anyone do that when you can seemingly get them for free after the FDIC is forced to step in?
The market is now pricing in Fed cuts as soon as next month
- The market is seeing a quick u-turn
You can see that in the price action today, with 5 bps of cuts now priced in for the June 14 meeting, or a 20% chance of a cut. The market also now sees 99 bps of easing before year end.
One way of looking at that is that there’s a 50% chance of a 200 bps cut and a 50% chance of no cut at all. That’s because of the chance of a deepening banking crisis. In that case, the Fed will be forced to weigh the possibility of premature easing against the potential for a banking crisis (or to stop a banking crisis).
Western Alliance halted — company says it is not up for sale
here’s WAL’s statement sent to CNBC:
“The Financial Times report that Western Alliance is considering as sale is categorically false in all respects. There is not a single element of the article is true. Western Alliance is not exploring a sale, nor has it hired an advisor to explore strategic options. It’s shameful and irresponsible that the Financial Times has allowed itself to be used as an instrument of short sellers and as a conduit for spreading false narratives about a financially sound and profitable bank. We are considering all of our legal options in response to today’s article”
The Atlanta Fed GDPNow estimate for 2Q growth rises to 2.7%
- Estimate is up from 1.8% on May 1
The Atlanta Fed GDPNow estimate for 2nd quarter growth rose to 2.7% from 1.8% on May 1 as a result of her recent economic releases.
In their own words:
The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2023 is 2.7 percent on May 4, up from 1.8 percent on May 1. After recent releases from the US Census Bureau, the US Bureau of Economic Analysis, and the Institute for Supply Management, the nowcasts of second-quarter real personal consumption expenditures growth and second-quarter real gross private domestic investment growth increased from 1.3 percent and 1.0 percent, respectively, to 2.1 percent and 2.7 percent, while the nowcast of the contribution of the change in real net exports to second-quarter real GDP growth decreased from 0.38 percentage points to 0.31 percentage points.
Commodities
Gold reaches new all-time high but trims earlier gains
- XAU/USD hits new ATH high as Fed signals pause, though profit-taking weighed on Gold price.
- The labor market eases as US Initial Jobless Claims rise to 242K, but Continuing Claims fall to 1.81 M.
- XAU/USD Price Analysis: It could dip below $2050 with sellers eyeing $2000; otherwise, buyers could challenge the ATH.
Gold price remains trading in positive territory after hitting a new all-time high (ATH) at around $2081.82. Some profit-taking, risk aversion, and another central bank increasing rates dragged XAU/USD price towards the $2050 area. At the time of writing, XAU/USD exchanges hands at $205.92, holding to gains of 0.40%.
XAU/USD clings to its earlier gains, though at brisk of losing $2050
The financial turmoil around the US banking system continues, as PacWest and Western Alliance Bank are under solid selling pressure, which triggered flows towards safety. Therefore, XAU/USD continues to hold its ground, despite recent US Dollar (USD) strength.
The economic agenda in the United States (US) revealed that unemployment claims for the week ending on April 29 jumped to 242K, exceeding estimates of 240K, a report cheered by US Federal Reserve (Fed) officials. Continuing claims, which include citizens receiving unemployment benefits for a week or more, fell by 38K, to 1.81 million, in the week ending on April 22.
The XAU/USD reached its new ATH high after the Fed increased rates above the 5% threshold and signaled that it would be data-dependent, opening the door for a pause. However, Fed Chair Jerome Powell reiterated that inflation remains high and that the labor market is tight. He kept the chances for additional tightening on the table and pushed back against cutting rates amidst inflation levels, twice the Fed’s goal.
On Thursday, the US Dollar Index (DXY), which measures the value of six currencies against the buck, fluctuates between gains and losses at 101.340, influenced by US Treasury bond yields. The US 10-year Treasury bond yield is losing eight bps, down to 3.315%, a tailwind for XAU/USD’s price.
WTI crude oil futures settle at $68.56
- Down $0.04 or -0.06%
The price of WTIcrude oil futures tumbled lower to $63.64 before rebounding back higher to close today little changed. The settlement price is coming in at $68.56. That’s down just $0.04 or -0.06%. The high price reached $69.84.
Looking at the daily chart, the price moved below the March 20 low of $64.36 on its way to session lows, but could not reach the next target at the December 2, 2021 low at $62.43. There is strong support between $62.43 and $64.36. Earlier in March, the price stalled near the area. Today is the 2nd test against that key support target.
Saudi Arabia cuts oil premium by 25-cents vs 40-cents expected
- A cut of somewhere in the 40-cent range was expected (some said $1).
Saudi Arabia cut the official selling price of oil sent to Asia by 25-cents to +$2.55, according to reports.
Still, a price cut doesn’t speak to a market that’s undersupplied, nor does the recent price action in crude. It plunged to $63.64 in a blowout early in Asia, though WTIcrude oil is back to $68.17, it’s still down 39-cents on the day and 10% on the week.
EU News
ECB rate decision and weak US banks weigh on European shares
- UK FTSE 100 down -1.1%. France Down -0.85%
The ECB raised rates by 25 basis points and signaled that the “journey” is continuing. Some members wanted a 50 basis point hike.
US regional bank index is also keeping investors on alert and adding to a bearish tone toward stocks and growth.
The final numbers for the day are showing:
- German DAX -80.80 points or -0.51%
- Frances CAC -63.06 points or -0.85%
- UK’s FTSE 100 -85.73 points or -1.10%
- Spain’s Ibex -33.10 points or -0.36%
- Italy’s FTSE MIB -165.02 points or -0.61%
Some ECB governing council members see 2-3 hikes ahead – report
- ECB sources from Reuters
- Some ECB policymakers see 2-3 hikes ahead
- Holzmann, who didn’t have a vote at the meeting, was the lone holdout
- Policymakers reached deal on smaller hike in return for guidance for more hikes ahead and an APP wind down
Other News
UBS is already thinking about selling Credit Suisse
- UBS declares U-Turn
Reuters reports that UBS is reviewing options for its recent-acquired Credit Suisse takeover, including keeping the investment bank and selling the rest, potentially via IPO.
The report says the talks are at an early stage.
US officials assessing possible ‘market manipulation’ regarding banking shares – report
- Reuters report, citing a source
US Federal and State officials are assessing possible market manipulation regarding banking shares, according to a Reuters report. The source says many US regional banks have sound fundamentals and stable deposits while remaining well-capitalized.
On the one hand, these reports are about hiring consultants to sell companies sound fishy and WAL adamantly denied them. On the other sound, whining about market manipulation always looks like a panic move.
Cryptocurrency News
Dogecoin price in process of creating bear trap as DOGE primed for 5% intraday uptick
- Dogecoin price jumps over 2% in the ASIA PAC session.
- DOGE undergoes a small fade at the start of the European session.
- Expect to see a swing higher when the US session kicks in with the price target for Thursday set at $0.084.
Dogecoin (DOGE) price was on the descent together with Bitcoin and other major pairs on Wednesday. This morning’s turnaround in the ASIA PAC session is being noticed across the board with the Relative Strength Index (RSI) performing a knee-jerk reaction. As bulls have pierced through the defence of the 55-day Simple Moving Average (SMA), expect to see continuation once the US trading session takes over with DOGE moving 5% higher near $0.084.
Dogecoin price to pull the bear trap
Dogecoin price saw a knee-jerk reaction in both the RSI and in its price action this morning as bulls decided that enough is enough. With a 2.5% profitable candle, the descent from Wednesday got erased, and the 55-day SMA, which was hanging as a cap over the price action, got broken to the upside. A few stops will get triggered by bears, who are now trying to re-enter their short positions with the current break below the 55-day SMA again.
DOGE is setting itself up here for a perfect bear trap as the re-entry of those earlier stopped-out bears means that bulls will soon be seen pushing price action above the 55-day SMA. A squeeze will occur next as bears get pushed out of their positions and see DOGE pop up toward $0.084. Expect not much further movement from there as the 200-day SMA has already proven to be a big hurdle in the past.
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