North American News
A kettlebell close for the major indices again
- Dow Industrial Average lower. S&P unchanged. NASDAQ higher
- The Dow industrial average closed marginally lower.
- The S&P index was unchanged, and
- The NASDAQ index closed marginally higher.
Specifically looking at the closing levels:
- Dow industrial average fell -140.05 points or 0.42% at 33286.56
- S&P index rose 0.63 points or 0.02% at 4192.62
- NASDAQ index rose 62.87 points or 0.50% at 12720.77
Cathie Woods, ARK Innovation fund rose 4.86%. Tesla helped that index with a gain of 4.85%
Shares of Micron today were down $1.94 or -2.85% at $66.23 after China banned some of their chips due to security concerns.. The low rate $64.76. The intraday high reached $66.75.
Federal Reserve Survey: Higher prices have negatively affected most households
- Fed Survey on households
A fed survey of US households reports:
- A decline in financial well-being from a recent Fed survey of consumers
- Higher prices have negatively affected most households
- One-third of households cited inflation as their main financial challenge
- 73% of respondents say they were doing at least okay financially in 2022 versus 78% in 2021
- Those saying they were worse off rose to 35%, the highest since the question was 1st asked in 2014
- More workers received and asked for a pay increase or promotion in 2022 versus 2021
- 63% of respondents said they would cover a $400 emergency expense with cash. Down from a record high of 68% in 2021
- Responses suggest that there has been some erosion in a household’s financial buffers
Fed’s Daly: Prudent to refrain from commenting on Fed policy action
- Feds Daly comments. Non-voting member
- Prudent to refrain from commenting on Fed policy action
- Declined to say what Fed should do at June meeting
- Wants to see if policy tightening is affecting economy
- Banking stress have a calm, banks are in solid shape
- Fed must be very dependent right now
- Still lots of data to get before June FOMC
- Tighter credit conditions may akin to 1 to 2 rate hike’s
- The Fed must be on watch for a slowing economy
Fed’s Barkin speaking but not on monetary policy/econony
- Comments from Barkin so far at least, are on central-bank digital currency
- If Congress did authorize a central-bank digital currency, the Fed would have to think hard about it’s design
- Issues like bank intermediation risks would have to be accounted for in any central-bank digital currency
Fed’s Bostic: SVB collapse shows that Fed processes and policies will have to change
Atlanta Fed’s Bostic now speaking:
- As the SVB collapse shows that fed processes and policies will have to change to become “on-demand” as banks and need them
- Would-be operational challenges to a “24-7” opening of the Fed’s discount window
Fed’s Bullard: The Fed will have to go higher on policy rate
- St. Louis Fed President Bullard speaking
- Base case remains relatively slow growth for the rest of the year and into 2024
- Recession arguments are overstated
- The September median of the Fed funds target of 5.11% (dot plot) was based on slow growth and inflation improvements that have not occurred
- The Fed will have to go higher on policy rate perhaps 50 basis points more hiking this year (the current rate is 5.25%)
- Wants to fight inflation while the labor market is strong
- Companies still scrambling for workers. Job growth above trend
- Core measures of inflation have not changed much in recent months
- If inflation is not controlled, Fed will have to do a lot more
- The Fed should err on the side of doing more
- The US decoupling from China is a major issue.
Fed’s Kashkari: It’s a close call on whether to raise or pause in June
- Remarks by Minneapolis Fed president, Neel Kashkari
- Not seeing evidence that banking stress is doing Fed’s job on inflation
- Fed has to keep going in battle against inflation
- Services inflation seems “pretty darn entrenched”
- It may be that we have to go north of 6% but that isn’t clear yet
Commodities
Gold bulls need to step in or face a sell-off to daily support
- Gold price bears are in the market but bulls are lurking.
- Fed speakers and the debt ceiling are on focus.
Gold price is currently trading down some 0.13% and made a low of $1,968.90 in New York as Wall Street opened.
From a fundamental standpoint, it could be argued that due to a couple of US Federal Reserve officials, the non-yielding bullion was pressured by hawkish rhetoric. At the same time, markets are looking for more clarity around the US debt ceiling negotiations.
´´With the June 1 X-date rapidly approaching, markets will look for signs of progress on a debt ceiling deal,´´ the analysts at TD Securities explained:
´´While there have been positive overtures from both sides, the work is not yet complete. Markets appear to be assuming that negotiations are a done deal, suggesting that any souring in tone as negotiations play out could upset risk sentiment.´´
President Joe Biden and House Republican Speaker Kevin McCarthy are discussing the debt ceiling on Monday. as for Fed speak, Minneapolis Fed President Neel Kashkari told CNBC that “it may be that we have to go north of 6%” to get inflation back to the Fed’s 2% target, while St. Louis Fed President James Bullard said there might be the need to go higher on policy rate.
Analysts at TD Securities explained that money managers liquidated some gold length and added shorts as debt ceiling optimism and resilient data aided the apparent formation of a triple top.
´´Still, our positioning analytics argue that selling exhaustion is imminent. After all, we estimate a high bar for subsequent CTA trend follower liquidations, whereas discretionary traders remain underinvested and Shanghai traders have begun adding to their positions once more,´´ the analysts added. ´´As expectations for a deeper Fed cutting cycle rise, discretionary traders should increasingly deploy their hoard of capital in the yellow metal, supporting new cycle highs before year-end.´´
WTI crude oil futures settles at $71.99
- Of $0.41 or 0.54%
The price of WTI crude oil futures are settling up $0.41 or 0.54% at $71.99. The high price reached $72.53. The low price extended to $70.67.
EU News
European indices close mixed
- German DAX snaps three-day win streak. Retraces off all-time highs
The major European indices are closing mixed. The German taxes down -0.32% on the day after 3 strong days took the index to new all-time highs last week. France’s CAC is also lower. UK FTSE 100 higher.
A look at the final numbers are showing:
- German DAX -51.39 points or -0.32% at 16223.98
- France’s CAC -13.80 points or -0.18% at 7478.17
- UK’s FTSE 100 +14.12 points or 0.18% at 7771.00
- Spain’s Ibex up 53.5 points or 0.58% at 9305.01
- Italy’s FTSE MIB -209.63 points or -0.76% at 27310.70
ECB’s Villeroy: Primary question today is not how much further to hike rates
- ECBs Villeroy speaking. EURUSD trades above and below its 100 day moving average
- Primary question today is not how much further to hike rates, but how large the pass-through of what is already in the pipe
- In current tightening cycle, the lag in policy transmission may be at the upper end of 1 – 2 year range. I expect today that we will be at the terminal rate not later than September
- The acceleration in rate increases from 50 basis points to 25 basis points was wise and cautious
- We need to monitor the pass-through of our substantial and exceptional rapid past hikes
- How long we maintained the rates high is now more important than the precise terminal level
- We will remain a data-driven looking at the meeting by meeting at the outlook for inflation and strength of monetary policy transmission
- We can hike or pause at the next 3 meetings
Eurozone March construction output -2.4% vs +1.7% m/m prior
- Latest data released by Eurostat – 22 May 2023
- Prior +2.3%; revised to +1.7%
Euro zone consumer confidence flash at -17.4 in May versus -16.8 estimate
- Euro zone consumer confidence for the month of May 2023
- Eurozone consumer confidence -17.4 in May versus -16.8 estimate
- Prior month -17.5
SNB total sight deposits 19 May CHF 515.7 bn vs CHF 520.1 bn prior
- Latest data released by the SNB – 22 May 2023
- Domestic sight deposits CHF 504.5 bn vs CHF 507.1 bn prior
Other News
US House Speaker McCarthy: Thinks we can make it all happen by debt deadline
- McCarthy speaking….
Speaker of the House McCarthy saying he is optimistic in 3 different ways:
- Thinks they can make it all happen by that deadline
- We can get a deal tonight
- We can get a deal tomorrow.
Now the negative, McCarthy adds:
- Nothing is agreed to in negotiations with Biden on US debt ceiling
- Debt ceiling must be reached this week it to get it through Congress before June 1
US House Speaker McCarthy to hold a press conference around 7pm US Eastern time
7pm US Eastern time is 2300 GMT.
McCarthy will be addressing the latest on debt limit negotiations
House Republican McHenry: There is still not an agreement on major items
- Meetings with GOP negotiators on debt limit has finished
The meetings with the GOP negotiators on debt limit has finished:
- GOP McHenry says there is still not in agreement on major items
- Does not think there is any interest in delaying these difficult conversations
- Is concerned about getting a deal that can pass the House, the Senate, and be signed by the president
Cryptocurrency News
Binance Coin price is on the road to recovery and the prospect of a 5% gain
- Binance Coin price recovers during the European trading session.
- BNB breaks back above the monthly S1 support level and heads higher.
- Should BNB break above the red descending cap, expect to see a quick sprint to $320 this week.
Binance Coin (BNB) price is heading higher this Monday after a failed string of tests at the topside and a breakdown in the ASIA PAC session on Monday morning. With price action already above the monthly S1, it means that bulls are resilient and willing to go the extra mile to get some gains out of this trading week. The Relative Strength Index (RSI) proves that bulls have been buying and are bound to head to $320 with a least a 5% gain for this week’s projection.
Binance Coin bulls are vying for a breakout
Binance Coin price is heading higher and is flirting with another test and possible break above the short-term red descending trendline. Over the weekend, the bulls already tried relentlessly and failed on several occasions. With a rejection on Monday morning, price action briefly slipped below the monthly S1 and flirted with $304 on the downside.
BNB saw a knee-jerk reaction in the European session on Monday unfold as bulls bought the dip regardless and looked to advance higher again for that test. This time that test could be proven successful with a break above the red descending trendline near $310. Once that opens up, expect a massive influx of more bulls with a rally toward $320 by the end of this week in this plain and simple breakout play.
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