North American News
US major indices close lower with the NASDAQ leading the way lower
- NASDAQ down -0.63%. Dow down 7 the last 8 trading days
Major averages close lower. The decline set today was led by the NASDAQ index. The Dow industrial average fell once again. It is down 7 of the last 8 trading days.
The final numbers are showing:
- Dow industrial average fell -131.90 points or -0.40% at 32910.89
- S&P index fell 25.48 points or -0.61% at 4180.02
- NASDAQ index fell -82.13 points or -0.63% at 12935.30
- Russell 2000 index fell -17.64 points or -1.00% at 1749.65
For the trading month, the major indices were mixed with the Dow moving lower.The S&P unchanged, and the NASDAQ moving higher:
- Dow industrial average -3.49%
- S&P index +0.25%
- NASDAQ index rose 5.8%
With 5 months in the book, the Dow industrial average is a down marginally. The S&P and NASDAQ are higher with the NASDAQ overwhelmingly outperforming.
Salesforce reported better-than-expected earnings
- Dow Industrial Average -0.72%
- S&P index up 8.86%
- NASDAQ index up 23.59%
After the close, Salesforce reported better-than-expected earnings, but shares are still lower
- EPS $1.69 versus $1.61 estimate
- Revenues $8.25 billion versus 8.18 billion estimate
Guidance Salesforce shares are down -4% in after-hours trading
- YoY Revenues $34.5 to $34.7 billion versus $34.65 billion estimate
- YoY EPS $7.41 – $7.43 versus $7.14 estimate
Salesforce shares are down -4% in after-hours trading
Crowdstrike:
- EPS of $0.57 versus $0.51 expected
- Revenues $0.693 billion versus expected $0.676 billion
Guidance:
- Q2 expected at $0.54 – $0.57 versus expectations of $0.54
- Revenues Q2 $0.717B – $0.727B versus expected $0.719 billion
Crowdstrike shares are down -12.57% despite the beats on the top and bottom line estimates.
Fed’s Beige Book: Economic activity was little changed overall in April and early May
According to Federal Reserve’s Beige Book, “economic activity was little changed overall in April and early May”. The expectations for future growth deteriorated a little, “though contacts still largely expected a further expansion in activity.”
“Employment increased in most Districts, though at a slower pace than in previous reports”, said the Beige Book.
Key takeaways from the Beige Book:
“Economic activity was little changed overall in April and early May. Four Districts reported small increases in activity, six no change, and two slight to moderate declines. Expectations for future growth deteriorated a little, though contacts still largely expected a further expansion in activity. Consumer expenditures were steady or higher in most Districts, with many noting growth in spending on leisure and hospitality. Education and healthcare organizations saw steady activity on balance.”
“Employment increased in most Districts, though at a slower pace than in previous reports. Overall, the labor market continued to be strong, with contacts reporting difficulty finding workers across a wide range of skill levels and industries.”
“Prices rose moderately over the reporting period, though the rate of increase slowed in many Districts. Contacts in most Districts expected a similar pace of price increases in the coming months. Consumer prices continued to move up due to solid demand and rising costs, though several Districts noted greater price sensitivity by consumers than in the prior report.”
US April JOLTS job openings 10.103m vs 9.375m expected
- Highlights from the Job Openings and Labor Turnover Survey
- Prior was 9.59m
- Hires 3.9% vs 4.0% prior
- Separations rate 3.7% vs 2.5% prior
- Quits 2.4% vs 2.5% prior
Feds Jefferson: Skipping a rate increase would allow Fed officials to see more data
- Feds Jefferson comments push chances for a June rate hike lower
- Holding US central bank policy rate constant at the current meeting should not be taken to mean rates have reached a peak for this tightening cycle
- Skipping a rate increase at coming meeting would allow Fed officials to see more data before deciding on extent of additional tightenings
- Monetary policy works with a lag, and a year is not long enough to feel the full effect
- Base case Outlook is not for recession
- Higher interest rates and lower earnings could test the ability of businesses to service debt
- Inflation remains too high in progress by some measures has been slowing
- Impact of tighter credit on the economy rate remains uncertain
US MBA mortgage applications W.E. 26 May -3.7% vs -4.6% prior
- Latest data from the Mortgage Bankers Association for the week ending 26 May 2023
- Prior -4.6%
- Market index 197.4 vs 205.0 prior
- Purchase index 154.4 vs 158.3 prior
- Refinance index 412.5 vs 443.0 prior
- 30-year mortgage rate 6.91% vs 6.69% prior
Fed’s Bowman: Residential real estate ‘appears to be rebounding’
- Bowman speaks about real estate
- Residential real estate appears to be rebounding, with implications for the Fed’s inflation battle
- While lower rents will eventually be reflected in inflation data, home prices themselves are levelling out
- Pandemic-related surge of homebuilding and renovation has moderated, but important to understand long-term impact on family formation, housing demand
Fed’s Harker: I am in the camp that we can skip a meeting
- Comments from the Philly Fed leader
- This economy keeps chugging along
- We’re committed to getting inflation under control
- It would be a skip, not a pause
- A pause says you may hold there for awhile and I don’t know that we’re ready for that yet
Fed’s Collins: Fed is intent on reducing inflation
- Feds Collins giving closing remarks at a Fed Listens event
Boston Fed president Susan Collin (non-voting member) at a Fed Listens event on COVID, is on the wires saying:
- Fed is intent on reducing inflation
- Says inflation is simply too high
Commodities
Gold Forecast: Gold to peak at $2,050 by Q1 2024 and then ease back to $2,000 – Crédit Agricole
Strategists at Crédit Agricole have made an upward revision to their Gold price forecast for 2024.
Three factors behind the revised outlook
“We now expect Gold to peak at $2,050 by Q1 2024 and then ease back to $2,000 by the end of Q2 2024. We continus to hold our previous target of $2,000 for the precious metal by the end of 2023.”
“The ongoing US debt-ceiling debacle has prompted investors to flock to Gold, viewing it as a safe haven and a reserve asset in times of uncertainty. Gold has historically performed well during past debt ceiling incidents, often holding onto and even extending its gains in the months following a debt ceiling resolution.”
“US political risks could continue to boost Gold’s appeal, even after the current debt ceiling issue is resolved. If the statutory debt limit is extended until January 2025, the ensuing political wrangling could amplify risks surrounding the 2024 US presidential election.”
“We predict a weakening USD in late 2023 and early 2024, due to expectations of the Federal Reserve entering an easing cycle amidst a potential US recession and subsiding inflation. This scenario is likely to further enhance Gold’s attractiveness.”
OPEC leaves major newswires off the invite list for the upcoming meeting
- Reporters from Reuters, Bloomberg News and Dow Jones not invited
OPEC didn’t invite reports from from Reuters, Bloomberg News and Dow Jones to attend the OPEC+ meeting in Vienna this weekend, according to reports.
No reason was given and reporters from other publications have been invited. It may be a result of comments from Saudi Arabian Energy Minister Prince Abdulaziz bin Salman, who riled the market on May 23.
“Speculators, like in any market they are there to stay, I keep advising them that they will be ouching, they did ouch in April, I don’t have to show my cards I’m not a poker player.. but I would just tell them to watch out,” he told the Qatar Economic Forum organised by Bloomberg.
Officials later accused news organizations of taking his comments out of context, so that could be the motivation.
WTI crude oil futures settles at $68.09
- WTI crude oil has its worst month since November 2021
The price of WTI crude oil settled at $68.14. That’s down $1.37 or -1.97% on the day. The low price reached just above the $67 level at $67.03. The high price reached $69.69.
For the month of May, crude oil fell -11.41% on the month.That was the worst month since November 2021 when the price fell over 20%. The low today was the lowest level since May 4.
OPEC output fell 460k bpd in May – survey
- The secondary sources survey from Reuters
- OPEC members pumped 28.01m bpd in May
- Production fell 460k bpd after voluntary cuts took effect
- Output is down 1.5 mbpd from Sept
- April output was revised down 150k bpd
EU News
European equity close: DAX closes May on the lows of the month
- Closing changes for the main European markets
It was a painful day for European stock market bulls on Wednesday as broad-based selling hit, despite a German CPI report that could pave the way for an earlier ECB pause.
- Stoxx 600 -1.1%
- German DAX -1.7%
- UK FTSE 100 -1.0%
- French CAC -1.7%
- Italy MIB -2.1%
- Spain IBEX -1.4%
Germany May preliminary CPI +6.1% vs +6.5% y/y expected
- Latest data released by Destatis – 31 May 2023
- Prior +7.2%
- CPI -0.1% vs +0.2% m/m expected
- Prior +0.4%
- HICP +6.3% vs +6.8% y/y expected
- Prior +7.6%
- HICP -0.2% vs +0.2% m/m expected
- Prior +0.6%
Bavaria May CPI +6.1% vs +7.2% y/y prior
- Latest data released by Destatis – 31 May 2023
The other state readings released at the same time:
- Hesse CPI +5.9% vs +6.9% y/y prior
- Brandenburg CPI +6.3% vs +7.6% y/y prior
- Baden Wuerttemberg CPI +6.6% vs +7.3% y/y prior
Germany May unemployment change 9k vs 15k expected
- Latest data released by the Federal Employment Agency – 31 May 2023
- Prior 24k
- Unemployment rate 5.6% vs 5.6% expected
- Prior 5.6%
Italy May preliminary CPI +7.6% vs +7.4% y/y expected
- Latest data released by Istat – 31 May 2023
- Prior +8.2%
- HICP +8.1% vs +7.5% y/y expected
- Prior +8.7%
Italy Q1 final GDP +0.6% vs +0.5% q/q prelim
- Latest data released by Istat – 31 May 2023
- GDP +1.9% vs +1.8% y/y prelim
Saxony May CPI +6.5% vs +7.6% y/y prior
- Latest data released by Destatis – 31 May 2023
SNB’s Jordan: We need to bring inflation below 2% as soon as possible
- Comments from the SNB leader
- The longer inflation is above 2%, the harder it is to bring it down
ECB’s de Guindos: Inflation data today and yesterday has been positive
- Remarks by ECB vice president, Luis de Guindos
- Victory over inflation is not there yet
- But the trajectory is correct
Switzerland May Credit Suisse investor sentiment -32.2 vs -33.3 prior
- Latest data released by Credit Suisse and CFA Society Switzerland – 31 May 2023
- Prior -33.3
Other News
We have the votes to pass the debt limit bill today – McHenry
- Remarks by the lead GOP negotiator in the debt ceiling talks, Patrick McHenry
It’s all just semantics at this point as the debt ceiling issue is now kicked down the road once again, as it has always been over the past many decades. As mentioned earlier in the week, this isn’t going to be a concern for markets anymore as the focus switches back to central banks, inflation, and the economy.
Senate Republican leader McConnell: We anticipate debt ceiling bill passing
US Senate Republican Leader Mitch McConnell is helping to steer crucial legislation to raise the debt ceiling past Senate conservatives but he says:
´´We anticipate debt ceiling bill passing,´´ and claims that the bill is expected to come to the Senate as soon as Thursday.
Chinese yuan drop but another tailwind for the dollar
- The offshore yuan has fallen to its weakest levels since November against the dollar
The run above 7.00 this month has been a key one for the Chinese offshore yuan and that is building further today after a weak set of PMI data in Asia trading.
Cryptocurrency News
Chainlink price rallying by 6% might act as relief for the 78% of LINK holders facing losses
- Chainlink price has been stuck under the $7 mark for more than three weeks now.
- LINK holders are some of the biggest losers in the market, with nearly 500K addresses currently underwater.
- A demand wall at $6.85 worth over $2.3 billion awaits, breaching which could spell recovery for LINK.
Chainlink price is following the broader market cues like many of the other altcoins in the market. However, one distinct factor of this cryptocurrency network is that the ratio of investors at a loss is far higher than those in profits, making a recovery more crucial for LINK.
Chainlink price needs to hit this level
Chainlink price, trading at $6.46, has failed to recover back above $7 following the early May crash. Being stuck under it for nearly three weeks now, the altcoin has left many of its investors desperate for a recovery. These LINK holders happen to be some of the biggest losers in the crypto market, as the majority of them are currently underwater.
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