North American News
NASDAQ rises by 2.25%.Dow industrial average has its best day since Jan
- S&P and Dow rises sharply but close lower on the week. NASDAQ near unchanged on the week
The major US indices are closing sharply higher with the NASDAQ index leading the way. The Dow industrial average had its best day since January 6 to be precise. The S&P index has 4th best percentage gain this year. The NASDAQ index rose 2.25% and traded to the highest level since February 2 (the high price for 2023)
The final numbers are showing:
- Dow industrial average rose 546.75 points or 1.65% at 33674.39
- S&P index rose 75.05 points or 1.85% at 4136.28
- NASDAQ index rose 269 points or 2.25% at 12235.40
The Russell 2000 index, small caps rose 41.06.2 or 2.39% at 1759.87. There was a large gain since January 31 when the index rose 2.45%
For the trading week,
- Dow Industrial Average fell -1.24%
- S&P index fell -0.80%
- NASDAQ index closed marginally higher by 0.07%
- Russell 2000 fell -0.51%
US April non-farm payrolls +253K vs +180K expected
- April 2023 US employment data from the non-farm payrolls report
- Prior was +236K(revised to +165K)
- Two-month net revision -149K
- Unemployment rate 3.4% vs 3.6% expected
- Prior unemployment rate 3.5%
- Participation rate 62.6% vs 62.6% prior
- U6 underemployment rate 6.6% vs 6.7% prior
- Average hourly earnings +0.5% m/m vs +0.3% expected
- Average hourly earnings +4.4% y/y vs +4.2% expected
- Average weekly hours 34.4 vs 34.4 expected
- Change in private payrolls +230K vs +160K expected
- Change in manufacturing payrolls +11K vs -5K expected
- Household survey +139K vs +577K prior
- Birth-death adjustment+378K vs -29K prior
Fed’s Bullard: Thought quarter point hike this week was a good step
- First Fed member to speak post FOMC
- Thought quarter point hike this week is a good step
- This moves puts Fed above 5%, but there is a lot of inflation in the economy
- Should not have recession as a base case
- Base case is slow growth, declining inflation
- Today’s jobs report again stronger than expected
- Labor market is very tight and will take time to cool
- Regional banks have had a couple of issues but represent a small share of US finanical intermediateion
- Sense is that regional banks will do just fine
- Top takeaway from Barr Report is that no amount of regulation will fix bad management
- Fed can still achieve a soft landing
- Recent drop in market interest rates probably “swamping” impact of any credit tightening from bank stress.
- Ultimate impact of bank stress on economy will be small.
- Wall Street “glued” to transitory inflation story, not prepared if inflation persists and Fed has to do more with rates.
- Aggressive policy has stemmed the rise of inflation, but not clear it has put inflation on a clear downward path.
- Jobs report suggests consumption will remain strong and there is plenty of room to fight inflation now.
- Policy at “low end” of restrictive zone, not yet clear if restrictive enough for a downward inflation path.
- Thinks Fed will have to “grind higher” on rates due to slower decline in inflation than others.
- Ready to be “data dependent” with an “open mind” on whether to pause or hike at June meeting.
- Jobs report “impressive” in terms of employment growth, still a long way from balance in the labor market.
Wholesale US used-vehicle prices drop in April in Manheim index
- US used vehicle prices fall 3.0% m/m and 4.4% y/y
“While values increased 8.6% through the first quarter from December, the market has reversed course in April, with our monthly figures showing a month-over-month decline for the first time in 2023,” said Chris Frey, senior manager of Economic and Industry Insights for Cox Automotive. “Values in April also continue to be lower year over year. We’ve experienced eight straight months of year-over-year declines, averaging 8.3%, and it’s likely not over yet.”
Commodities
Gold fails at the top of the range again
- Tough one for gold bulls
The latest leg of the gold bull run was predicated on:
1) An unstable banking system
2) A Fed pivot
Today we’re getting a big rebound in US regional banking stocks, albeit from extremely-depressed levels. It’s been aided by a JPMorgan upgrade of some names. On top of that, the US non-farm payrolls report was strong and that likely lengthens the timeline before the FOMC can cut rates.
In response, gold is down $42, or 2.1%, to $2008.
Technically, gold momentarily touched an all-time high yesterday in thin Asian trade but for all intents and purposes, the tough barrier at $2070 held. You have to zoom all the way out to a monthly chart to show how pivotal that level is.
Silver rally stalls amidst positive US data as bearish signals emerge
- XAG/USD risks a bearish-engulfing pattern and double-top formation as the price retreats from a 12-month high.
- A downward path is anticipated, with crucial support levels at $25.00 and $24.00 amid fading buying momentum.
Silver price retreats after reaching a 12-month new high at $26.13 in the New York session. An improvement in the US labor market due to an upbeat US jobs report trumped XAG’s chances to test last year’s high. At the time of writing, the XAG/USD is trading at $25.60, down 1.69%.
XAG/USD Price Action
As of writing, XAG/USD is still upward biased but at the brisk of a pullback. If XAG/USD registers a daily close below the May 4 daily low of $25.44, that could form two bearish signals: firstly, a bearish-engulfing candle pattern which suggests that downward action is warranted. The second is the possible formation of a double-top, a major reversal chart pattern, which could drive prices toward the $24.00 figure.
The Relative Strength Index (RSI) indicator added another signal to the mix, forming a negative divergence. This means that as XAG/USD’s price action reached successive higher highs, the RSI peaked at lower highs as buying momentum faded. Additionally, the 3-day Rate of Change (RoC) shows that buying pressure is waning as sellers move into action.
Therefore, XAG/USD’s path of least resistance is downwards. The first support would be the $25.00 mark. A breach of the latter would expose the April 25 swing low of $24.49, followed by the 50-day Exponential Moving Average (EMA) at $24.11, which, once cleared and XAG/USD’s will challenge the $24.00 figure.
Baker Hughes oil rig count -3 at 588
- Baker Hughes rig count
- Oil rigs -3 at 588
- natural gas -4 at 157
- total rigs -7 at 748
EU News
European major indices enjoy solid gains to close the trading week
- Major indices mostly lower this week. German DAX closes marginally higher for the week.
The major European indices enjoy solid gains to close the trading week. The German Dax and Italy’s FTSE MIB closed higher for the week.
In trading today:
- German Dax rose 227 points or 1.44% at 15961.03
- Frances CAC rose 92.16 points or 1.26% at 7432.94
- UK’s FTSE 100 rose 75.72 points or 0.98% at 7778.37
- Spain’s Ibex rose 99.98 points or 1.11% at 9143.59
- Italy’s FTSE MIB rose 678 points or 2.54% at 27348.58
For the trading week, France, UK, and Spain moved lower. Germany and Italy closed higher this week helped by today’s oversize gains:
- German Dax, up +0.24%
- Frances CAC down -0.78%
- UK’s FTSE 100 down -1.17%
- Spain’s Ibex down -1.01%
- Italy’s FTSE MIB up +0.90%
ECB’s Muller: The ECB most consider the impact of lagged impact
- Comments from Muller
- It is prudent to allow previous hikes to make an impact
Muller is a hawk but maybe today’s German industrial production number rattled him.
Other News
CNBC: White House is considering the possibility of a shorter-term debt ceiling extension
- CNBC Washington correspondent Tausche tweets
CNBC Washington correspondent Kayla Tausche is reporting:
The White House is weighing the possibility of a shorter-term debt ceiling extension to avert a default and allow the parties to keep negotiating.
President Biden: Debt ceiling and budget are totally unrelated
- Can have budget discussions but not under threat of default
Pres. Biden says:
- Debt ceiling and budget are totally unrelated
- Republicans are divided on the debt ceiling
- MAGA Republicans want Whitehouse to agree to draconian cuts
- Can have budget discussions but not under threat of default
- Debt ceiling showdown is a manufactured crisis
Cryptocurrency News
PEPE coin surges 250%, and market cap crosses $1.5 billion ahead of Binance listing
- PEPE coin is now among the 50 biggest cryptocurrencies in the world, with the network growing by 240% in a week.
- Binance is set to list PEPE and Floki Inu pairs with USDT and TUSD.
- Owing to technical difficulties, Binance had to suspend deposits for both the tokens, reassuring users that their funds were safe.
PEPE coin is nearing the three-week mark since its launch, still banking on its absurd origins. The meme coin is now beginning to find more support from one of the biggest mainstream crypto players, which facilitated new heights for the cryptocurrency.
PEPE coin joins the big boys
PEPE coin on May 5 witnessed exceptional growth as the cryptocurrency marked new highs. Rising by more than 250% in the span of 24 hours, the meme coin is now trading at $0.0000037. Apart from the general bullish hoo-ha surrounding the altcoin, a major catalyst in this rally was an announcement from Binance.
The biggest crypto exchange in the world stated that it would be adding PEPE coins with USDT and TUSD pairs on the platform starting May 5. This listing would basically legitimize the meme coin as Binance also attempts to capitalize on the present hype as well as the interest generated by the announcement. Along with PEPE, FLOKI is set to be listed on the exchange, which also led to a 65% rally in Floki Inu price.
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