North American News
US stock indices close mixed. Dow industrial average lower. NASDAQ higher
- S&P near unchanged on the day
The major US stock indices are ending the session with mixed results in what has been a quiet Monday. The Dow industrial average fell modestly. The S&P was near unchanged, and the NASDAQ index rose modestly.
The final numbers are showing:
- Dow industrial average fell -55.71 points or -0.17% at 33618.68
- S&P index rose 1.87 points or 0.05% at 4138.13
- NASDAQ index of 21.49 points or 0.18% at 12256.91
- Russell 2000-5.408 points or -0.31% at 1754.47
The regional bank ETF (KRE), open tire but is ending the day at lower. It felt $-0.76 or -1.98% at $37.59.
New York Fed survey sees one year expected inflation down to 4.4% from 4.7% last month
- New York Fed survey on inflation released
The monthly New York Fed survey on inflation expectations shows:
- 1 year inflation expectations falls to 4.4% from 4.7% in March
- 3 year inflation expectations rises to 2.9% from 2.8% last month
- 5 year inflation expectations rises to 2.6% from 2.5% last month
In other surveyed measures:
- Expected home price gains jumps to 2.5% which is the highest since July 2022
- 1 year ahead expected earnings growth unchanged at 3.0%
- Household spending expectations of falls to 5.2% in April from 5.7% last month. The fall is the weakest since September 2021
- Credit access perceptions were mixed in April
- Consumers expect gas prices to rise 5.1% (vs 4.6% last month) and food prices to increase 5.8% (vs 5.9% last month) over the next year.
- Unemployment outlook worsened, with a 41.8% likelihood of a higher unemployment rate in a year. That is an increase of 1.1% from last month.
Fed Senior Loan Officer Survey Q1: Banks expect tighter lending standards for 2023
- Fed senior loan officer survey for Q1 2023
- Tighter lending standards and weaker demand for business and most consumer credit through Q1 versus prior quarter
- Net 46.0% of banks versus 44.8 in prior quarter taking credit C&I for large and medium firms through Q1
- Net 46.7% of banks versus 43.8% in prior quarter tightened credit for C&I loads for small firms through Q1
- Net 62.3% of banks versus 44.8% in the prior quarter raised spread for C&I loans for large and medium firms through Q1
- Nt 58.3% of banks versus 32.8 in prior quarter of banks raised spread for C&I loans from large and medium firms through Q1
- Net 53.3% of banks versus 42.2% in prior quarter reported stronger demand for C&I loans from small firms through Q1
- Banks tightened credit terms for all categories of commercial real estate loans through Q1 versus prior quarter
- Banks tightened credit terms for all categories of consumer credit through Q1 versus prior quarter, fewer were more willing to make consumer installment loans
- Banks saw net negative demand for consumer credit through Q1 but less so than prior quarter
Goldman Sachs does not see a cut in 2023
- US yields are higher but still forecasting rate cuts in 2023
Goldman Sachs is out saying that they do not see a rate cut in 2023.
The markets are still discounting rate cuts, however, despite comments from Powell and Bullard that the Fed is on hold.
Atlanta Fed GDPNow estimate for Q2 growth unchanged at 2.7%
- The Atlanta for GDP estimate for second-quarter growth
The Atlanta Fed is out with its most recent estimate for Q2 growth after the recent economic data. The last reported on May 4. 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 8, unchanged from May 4 after rounding. After last week’s employment situation report from the US Bureau of Labor Statistics and this morning’s wholesale trade report from the US Census Bureau, an increase in the nowcast of second-quarter real gross private domestic investment growth from 2.7 percent to 4.2 percent was offset by a decrease in the nowcast of second-quarter real personal consumption expenditures growth from 2.1 percent to 1.8 percent, while the nowcast of the contribution of the change in real net exports to second-quarter real GDP growth increased from 0.31 percentage points to 0.35 percentage points.
US wholesale inventory for March 0.0% versus 0.1% estimate
- US also inventories for March 2023
- Prior month of 0.1%
- Sales: In March 2023, merchant wholesaler sales reached $655.3 billion, a -2.1% decrease from February and a -2.9% decrease from March 2022. January to February 2023 change was an unrevised increase of 0.4%.
- Inventories: At the end of March, total inventories were $918.5 billion, virtually unchanged from February and down -9.1% from March 2022. February to March 2023 change was revised to virtually unchanged.
- Inventories/Sales Ratio: The March ratio was 1.40, compared to 1.25 in March 2022.
US employment trends for April 116.18 versus 115.51 last month
- US employment transfer April 2023
- Prior month 116.24 revised lower to 115.51
- Employment trends for April rises to 116.18 from a revised 115.51 last month
Frank Steemers from the Conference Board said:
“The ETI ticked up in April and remains elevated, though below the peak it reached in March 2022. The Index signals job gains will likely continue, albeit somewhat slower, over the next few months. We continue to forecast a short and mild recession starting in 2023 although it may take until later in the year to see substantial weakening in job growth, or monthly job losses. For now, the labor market remains on strong footing with job growth continuing. However, some softening is visible across several labor indicators. Job openings and quits have declined, layoffs have ticked up, and compensation growth is softening. Still, the labor market remains resilient and tighter than before the pandemic, complicating the Federal Reserve’s efforts to slow inflation. This may prompt the Fed to raise interest rates by an additional 25 basis points to decelerate job growth and wage gains.”
Fed Goolsbee: Fed must be data dependent and watch credit conditions
- Fed’s Goolsbee in a Yahoo Finance interview
- Fed must be data dependent and watch credit conditions
- Getting vibes at a credit squeeze is beginning
- Trying to stabilize prices without a hard landing
- Recession is a possibility
- Weighing how much fed work is being done by tighter credit
- Too early to make a call on rates for June FOMC
- Should be especially attuned to issues in the bond market related to the debt limit
- if there is doubt about US treasuries that would increase bank stress
- US Congress has to raise the debt ceiling
Commodities
Gold bears eye a run towards $2,000
- Gold price bears are taking back control.
- Bears eye a downside extension towards $2,000.
WTI crude oil futures settles at $73.16
- Up $1.82 or 2.55%
The price of WTI crude oil futures are settling at $73.16. That’s up $1.82 or 2.55%. The high price for the day reached $73.69. The low price was at $71.04.
Looking at the hourly chart, the price has retraced 50% of the move down from the April 12 high to the low reached last week on May 4. The midpoint level comes in at $73.59. A high price today reached just above that level at $73.69. The price is also toying with the 200 hour moving average currently at $73.01. The price settled above that moving average level tilting the bias more to the upside, but getting above the 50% is also important for the short-term bias going forward.
EU News
Major European indices close mixed on the day
- German DAX modestly lower
The major European indices are closing the session mostly higher:
- German DAX fell -0.05%
- France’s CAC rose 0.11%
- Spain’s Ibex rose 0.70%
- Italy’s FTSE MIB rose 0.22%
ECBs Lane: There is still a lot of momentum and inflation
- ECB Lane speaking
- There is a lot of momentum and inflation
- Still momentum in food and core inflation
Other News
Yellen says again Treasury will run out of cash by June 1
US Treasury Secretary Yellen speaking in a CNBC intervew
- Says our projection is that as early as June 1 treasury will run out of cash and extraordinary measures to pay government’s debts
- Something has to give, it’s essential that Congress raise debt ceiling
- Default would be ‘huge hit’ to u.s. Economy
- If congress doesn’t raise debt ceiling, president biden will have to make decisions on what to do with resources, but there are no good options
- Doesn’t want to discuss or rank options
- Default would have ‘tremendously adverse effects’ on financial markets and economy
- Clearly there is a big gap between the president’s position and that of Republicans on debt ceiling
- Republican spending proposals are ‘draconian’
President Biden to meet with congressional leaders on Tuesday at 4 PM
- A meeting is announced
A scheduled meeting between Pres. Biden congressional leaders from both parties will take place tomorrow (Tuesday) at 4 PM. Gen. Jan over the weekend warned of the treasury running out of money by June 1 (give or take) and stress that the impact to the financial markets would be dire. Chicago Fed Pres. Goolsbee said this morning that a default would likely increase the stress on banks.
Pimco’s founder Gross: Investors should expect 3 – 4% inflation going forward
- Shares some views on the markets
Pimco Founder Gross is saying:
- Selling volatility of regional banks
- investors are leery about deposit outflows
- investors should expect a 3 – 4% inflation going forward
Cryptocurrency News
Pro-XRP attorney bashes the SEC, deems its regulatory approach on Ripple as an “unconstitutional shortcut”
- Ripple proponent attorney John Deaton argues that the underlying asset is immaterial when determining if a contract, transaction or scheme constitutes an investment contract.
- Deaton argues that each secondary sale transaction of XRP needs to be examined separately, similar to the SEC’s case against LBRY Inc.
- XRP price is currently consolidating below the $0.50 level.
Attorney John Deaton noted in a recent tweet that the XRP’s status as a security has no material impact on the Securities and Exchange Commission (SEC) v. Ripple lawsuit. The legal expert drew similarities between the SEC’s case against payment giant Ripple and LBRY Inc.
Ripple proponent attorney’s take on XRP token’s status as a security
The US financial regulator Securities and Exchange Commission’s lawsuit against Ripple has dragged on for over two years now. Ripple proponent, attorney John Deaton, recently debated Marc Fagel on XRP’s status as an investment contract or security and its impact on the SEC’s lawsuit against Ripple.
Liechtenstein to allow payment for certain state services in Bitcoin – Handelsblatt
- Liechtenstein plans to allow Bitcoin payments for certain state services, Prime Minister Daniel Risch told the German business daily Handelsblatt in an interview.
Liechtenstein plans to allow Bitcoin payments for certain state services, Prime Minister Daniel Risch told the German business daily Handelsblatt in an interview.
“A payment option with Bitcoin is coming,”
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