North American News
Happy days. Russell 2000 leads stocks higher
- Russell 2000 up 2.2%
The major US indices or rose around 1.2%, but the Russell $2000 small-cap stocks was the big winner with a gain of 2.21%.
A snapshot of the phone numbers are showing:
- Dow industrial average up 408.63 points nearly racing the declines from yesterday of 422 points. The gain is good for 1.24% at 33420.76
- S&P index rose 48.89 points or 1.19% at 4158.78
- NASDAQ index rose 157.50 points or 1.28% at 12500.56. The NASDAQ closed at the highest level since August 26, 2022
- Russell 2000 rose 38.31 points or 2.21% at 1774.49
Cisco is reporting its earnings after the close and beat on the top and bottom lines.
- EPS $1 versus $0.97 estimate
- Revenues came in at $14.57 billion versus expected $14.39 billion estimate
Cisco shares are trading at $47.97 after closing at $47.63.
US treasury auctions $15 billion of 20 year bonds at a high yield of 3.954%
- Versus 3.964% WI level at the time of the auction
The US treasury auctioned off $15 billion a 20 year bonds:
- High yield 3.954%
- WI level at the time of the auction 3.964%
- Tail -1.0 basis points versus six-month average of -1.0 basis points
- Directs (a measure of domestic demand 18.1%) versus six-month average of 18.0%
- Indirects (a measure of international demand) 70.6% versus six-month average of 72.5%
- Dealers 11.3% versus six-month average of 9.5%
US MBA mortgage applications for the week ending 12 May -5.7% vs +6.3% prior
- Latest data from the Mortgage Bankers Association for the week ending 12 May 2023
- Prior +6.3%
- Market index 214.9 vs 227.8 prior
- Purchase index 165.4 vs 173.7 prior
- Refinance index 468.2 vs 507.1 prior
- 30-year mortgage rate 6.57% vs 6.48% prior
Atlanta Fed GDPNow tracker rises to 2.9% from 2.6% yesterday
- Q2 GDP tracker from the Atlanta Fed rises
In their own words:
The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2023 is 2.9 percent on May 17, up from 2.6 percent on May 16. After this morning’s housing starts report from the US Census Bureau, the nowcast of second-quarter real residential investment growth increased from -6.3 percent to 0.6 percent.
US housing starts for April 1.401M vs. 1.400M estimate
- US housing starts and building permits for the month of April
- Prior report 1.420M revised lower to 1.371M
- Housing starts 1.401M vs 1.400M estimate.
- Building permits 1.416M vs 1.437M estimate. Prior month was revised to 1.437M from 1.430M previously
- building permits fell -1.5% versus -3.0 revised last month.
Commodities
Gold could see a significant break higher on a weekly close above $2,075 – Credit Suisse
Gold is still stalling, but strategists at Credit Suisse stay biased towards an eventual move to new record highs above $2,070/75.
Support aligns at $1,969/66
“We look for the $2,070/2,075 record highs posted in 2020 and 2022 to remain a formidable barrier for now for further sideways consolidation.”
“Post the current ranging phase, we believe the market will eventually move to new record highs, supported by lower US Real Yields. With this in mind, above $2,075 on a weekly closing basis would be seen to mark a significant break higher, opening up a move to our first core upside objective at $2,330/2360.”
“Support is seen at $1,969/66, which includes the 55-DMA, below which would point to a more decisive rejection of the $2,075/70 highs.”
EIA weekly crude oil inventories +5040K vs -920K expected
- US weekly oil inventory data for the week ending May 12, 2023
- Prior was +2951K
- Gasoline -1381K vs -1060K exp
- Distillates +80K vs +57K exp
- Refinery utilization +1.0% vs +0.5% exp
- Production estimate 12.2mbpd vs 12.3 mbpd prior
The API data released late yesterday showed:
- Crude +3690K
- Gasoline -2460K
- Distillates -886K
- Cushing +2870K
WTI crude oil climbs $3 as OPEC sticks to its word
- Oil up $3 on the day
Oil is riding a strong risk mood and signs that OPEC+ members are following through on their pledged output cuts. The cuts took effect from May 1 but early signs showed high exports from Russia and many were skeptical they would play along, creating a risk of a fracturing cartel. Today though, Russian energy minister Novak confirmed that they’ve cut production and secondary data is also showing slowing production.
RBC also argues that Saudi Arabia could come in under quota:
Saudi crude production has rebounded above 10.8 mb/d after falling below 10 mb/d in the first two months of the year and trailing its supply quota by 400 kb/d on average since November. This would indicate that the real physical effect we see in May, on a m/m basis, would come in above the announced 500 kb/d for the kingdom.
EU News
European equity close: UK lags again
- Closing changes for the main European bourses
- Stoxx 600 -0.2%
- UK FTSE 100 -0.4%
- German DAX +0.3%
- French CAC -0.1%
- Italy MIB flat
- Spain IBEX +0.2%
UK’s Hunt: The overwhelming priority has to be lowering inflation
- Remarks by UK chancellor, Jeremy Hunt
- Agrees with people who are worried about high tax
- But priority has to be on the inflation front
- There is nothing automatic about bringing down inflation
- Government supports the BOE “150%”
Eurozone April final CPI +7.0% vs +7.0% y/y prelim
- Latest data released by Eurostat – 17 May 2023
- Prior +6.9%
- Core CPI +5.6% vs +5.6% y/y prelim
- Prior +5.7%
BOE’s Bailey: Things are looking a bit brighter than they did a couple of months ago
- Remarks by BOE governor, Andrew Bailey
- We expected a shallow, long recession back in November
- Now we are forecasting modest, but positive growth
- There has been greater resilience in the economy than expected
- But inflation has also come in higher than expected
- However, we have good reasons to expect inflation to fall sharply in the coming months
- That should begin with the April number, to be released on 24 May
- Risks to inflation are skewed significantly to the upside
- Our commitment to 2% inflation is unwavering
Other News
Reuters Poll: 65% expect Fed funds to be at 5% – 5.25% at end of year
- Reuters poll on the economy and Fed policy
A Reuters poll of economists shows:
- 65% expect the Fed funds rate to be at 5% – 5.25% at the end of the year (75 of 116)
- 73% expect the US to fall into recession this year ( 34 of the 46)
- 54% see the US default over debt ceiling is higher than previous standoffs (22 of 41)
House Speaker McCarthy: We have a structure to find a way to come to a conclusion
- Speaking on CNBC
US House Speaker McCarthy speaking on CNBC:
- I’m going to spend all my effort to make sure we get the job done
- We have the opportunity to find a common ground but only a few days to get the job done
- The only thing I’m confident about is now we have a structure to find a way to come to a conclusion
- At the end of the day we do not have a debt default
Biden speaks on debt ceiling: Says he’s confident on agreement
- Comments from Biden on the debt ceiling
- We’re going to come together because there is no alternative
- This negotiation is about the outlines of what the budget will look like
- The leaders all agree that we will not default
- It would be catastrophic if the US did not pay its bills
- We will continue discussions until we reach a deal
Cryptocurrency News
Ordinals and BRC-20 tokens might end up driving Bitcoin price to $20,000
- Bitcoin ordinals inscriptions have crossed the 7 million mark in two months, resulting in an all-time high network activity.
- An increase in congestion due to spam transactions caused by BRC-20 tokens has resulted in higher-than-average transaction fees.
- Bitcoin price is expected to bottom out at the $24,000 to $25,000 mark if the drawdown continues.
Bitcoin Ordinals, which enabled the possibility of creating NFTs on the world’s biggest cryptocurrency network, is starting to weigh on the network. The increasing cost of transactions is a rising concern, which could inadvertently trigger a further decline in Bitcoin price.
Impact of Bitcoin Ordinals and BRC-20
Since their origin of Ordinals and the introduction of the BRC-20 token standard in March of this year, Bitcoin-based meme coins have been rising. The meme coin fever had a grasp on the crypto market, too, for a while, thanks to PEPE and Milady tokens. As it took over Bitcoin too, issues began arising.
Firstly, this triggered the developers, who were not happy because spam transactions were on the rise again after a brief deceleration. Spam transactions usually create unwanted load on the network and in particular to Bitcoin this is caused by the rising hype and demand surrounding BRC-20 tokens.
The development of BRC-20-based meme coins is one of the leading causes of transactions running so high. A developer Ali Sherief even suggested banning spam transactions to protect the user base and minimize congestion on the network.
Like our recently launched pages. Join our community and never miss a beat in the dynamic world of trading.
https://www.facebook.com/BilalsTechLtd
https://www.linkedin.com/company/bilals-tech/
