Round up of today’s market news

North American News

US Market Momentum Reverses: Major Indices Retreat After Three Consecutive Days of Growth

• Sharp declines are pared into the close

A snapshot of the closing levels shows:

• Dow industrial average fell -375.14 points or -0.98% at 38085.79. At session low’s, the index was down -706.55 points.
• S&P index fell -23.21 points or -0.46% at 5048.41
• NASDAQ index fell -100.99 points or -0.64% at 15611.76

The small-cap Russell 2000 fell -14.30 points or 0.72% at 1981.11.

US Stock Indices Retreat Amid Meta Platforms’ Financial Outlook, Inflationary Concerns; Tech Giants Boost After-Hours Trading

Today marked a downturn for major US stock indices, influenced by significant developments across various sectors. The day commenced on a negative note following Meta Platforms’ announcement of higher expenses and slightly lower revenue projections after yesterday’s closing bell. This news set a cautious tone for investors, leading to a cascade of declines across the market.

Adding to the pressure, the US GDP report revealed stronger-than-expected inflationary signals, fueling concerns about rising prices and its potential impact on economic growth. Despite the downward trajectory throughout the trading session, the major indices managed to pare some of their losses towards the closing hours. Nevertheless, this reversal ended the recent three-day winning streak in the broader market indices.

One of the notable losers of the day was Meta Platforms, experiencing a significant drop of 10.56% (-$52.12) to close at $441.38. The company’s financial outlook, coupled with broader market uncertainties, weighed heavily on investor sentiment. Caterpillar also faced a challenging day, posting a loss of 7.02% (-$25.52) following disappointing earnings results reported yesterday.

Furthermore, negative earnings surprises impacted other sectors as well. Southwest Airlines and Bristol-Myers Squibb both reported earnings below expectations, resulting in share price declines of 6.96% and 8.51%, respectively.

However, after the market closed, optimism returned in after-hours trading with positive earnings reports from tech giants. Alphabet’s impressive results drove its shares up by a remarkable 12.44%, while Microsoft also soared by 4.88%. This positive momentum extended to related companies such as Nvidia and Super Micro Computers, which saw gains of 2.13% and 2.24%, respectively.

Even Amazon, which faced a 1.65% decline during regular trading hours, rebounded strongly in after-hours trading with a 3.49% increase. These after-hours movements suggest renewed investor confidence in the tech sector’s resilience and ability to deliver strong financial performance amid broader market challenges.

Some winners today included:

• Chipotle, +6.47%. Their earnings expectations.
• Tesla, +4.97%
• Super MIcro Computers rebounded with a gain of 4.33%
• Delta Airlines, +4.09%
• Nvidia, +3.71%
• Broadcom, was 2.99%
• Merck, +2.92%

Microsoft EPS $2.94 vs $2.82 estimate Revenues: $61.86 vs $60.82 estimate

• Beat on the top and bottom line, but it is in the details.

Microsoft is out with its earnings and beat on the top and bottom lines:

• EPS$2.94 versus $2.82 estimate
• Revenues of $61.869 versus $60.82 billion estimate

Other details:

• productivity and business processes $19.57 billion versus $19.54 billion estimate
• intelligent cloud $26.7 billion versus expected $26.25 billion
• more personal computing $15.58 billion was expected $15.07 billion expected

Microsoft shares are trading higher by $21 or 5.5% in after-hours trading

Alphabet EPS $1.89 versus $1.51 estimate. Revenues $80.54B versus $78.59B estimate

• Alphabet beats on top and bottom line

• EPS $1.89 versus $1.51 expected
• Revenues $8.54 billion versus $78.59 billion estimate
• Cloud revenue comes at $9.6 billion
• Alphabet issues a $0.20 per share dividend (its first ever dividend)

Shares of Alphabet are up $19 or 12.18%.

Meanwhile Intel did not have such a great quarter with:

• adjusted earnings-per-share of $0.18 versus $0.14 expected.
• Revenues messed at $12.7 billion versus $12.78 billion estimate.

The not so great news is that they forecast EPS of $0.10 in the Q2 versus $0.24 expected. They also see Q2 revenues of $12.5 billion to $13.5 billion versus $13.63 billion expected.

U.S. Treasury auctions off $44 billion of the seven year notes at a high yield of 4.716%

• WI level at the time of the auction 4.716%

• High Yield: 4.716

• WI level at the time of the auction:
  • Actual: 4.716%
• Tail (the Tail is the difference between the WI level trading just prior to the auction and the auction high yield. A negative tail is indicative of a strong auction):
  • Actual: 0.0 basis points
  • Six-auction average: +0.65 basis points
• Bid-to-Cover (the Bid to Cover is the number of bids from investors versus the supply of notes on sale. A higher number is indicative of stronger demand):
  • Actual: 2.48X
  • Six-auction average: 2.57X
• Dealers (the Dealers provide Liquidity and are a backstop in the event of lower than anticipated domestic and international demand. A high % is indicative of low demand from the normal investors:
  • Actual: 13.9% %
  • Six-auction average: 15.1%
• Directs (the Directs are a measure of domestic US demand. A higher number than the six month average is indicative of strong domestic demand):
  • Actual: 21.0%
  • Six-auction average: 17.1%
• Indirects (the Indirects are a measure of international demand. In higher number than the six month average is indicative of strong foreign demand for the issue. The vast majority of US debt is sold to foreign investors):
  • Actual: 65.1%
  • Six-auction average: 67.8%

US pending home sales for March 3.4% versus 0.8% estimate

• Pending home sales for the month of March 2024
• Prior month 1.6%
• Pending home sales month on month change +0.4% versus 0.8% expected
• Pending home sales index 78.2 vs 75.6 last month
• Pending home sales +0.1% from March 2023

US yields move to new session highs. The 2 &10 year yields at highest level since November

• 2-year yield back above 5%

US yields are moving to new session highs with the 2-year yield now back above 5.0% as traders price out rate cuts in 2024 even more.

The 2-year yield is trading at its highest level since November 14, 2023. The high-yield in 2023 for the two-year note reached 5.259%.

The 10 year yield is at its highest level since November 1, 2023. The high yield for the 10-year bond in 2023 reached 5.021%.

• 2-year yield 5.018%, + .1 basis points
• 5-year yield 4.745%, + .7 basis points
• 10 year yield 4.731%, +7.7 voice points
• 30-year yield 4.840%, +5.6 basis points

US initial jobless claims 207K versus 215K estimate

• Weekly US initial and continuing jobless claims

• Prior week initial jobless claims 212K
• initial jobless claims 207K vs 215K estimate
• 4-week moving average initial jobless claims 213.25K vs. 214.50K last week
• Prior week continuing claims 1.812M revised to 1.796M
• Continuing claims 1.781M vs. 1.805M estimate
• 4- week MA of continuing claims1.794M vs 1.802.25 last week

US Q1 advance GDP +1.6% vs +2.4% expected

• The first reading on first quarter 2024 US gross domestic product

• Weakest since Q1 2023
• Final Q4 reading was +3.3% annualized (revised to +3.4%)
• Q3 was +4.9% annualized

Details:

• Consumer spending +2.5% vs +3.3% prior
• Consumer spending on durables -2.1% vs +3.2% prior
• GDP final sales 2.0% vs +3.9% prior
• GDP deflator 3.1% vs 3.0% expected (1.7% prior)
• Core PCE +3.7% vs +3.4% expected (+2.0% prior)
• Business investment +3.2% vs +0.7% prior

Percentage point changes:

• Net trade pp -0.86 vs +0.32 pp prior
• Inventories -0.37 pp vs -0.47 pp prior
• Govt +0.21pp vs +0.79 pp prior

US March advanced goods trade balance $-91.83 billion versus $-91.1 billion estimate

• Advanced goods trade balance for March 2024

• Prior month $-90.3 billion
• International Trade in Goods:
  • The international trade deficit increased by $1.5 billion to $91.8 billion.
  • Exports decreased by $6.1 billion to $169.2 billion.
  • Imports decreased by $4.6 billion to $261.0 billion.

US March wholesale inventory advanced -0.4% versus 0.4% (revised from 0.5%) last month

• US wholesale and retail inventories

• Wholesale inventories prior month +0.5% revised to 0.4%. Retail inventory ex air prior month +0.4% revised to +0.3%
• Advance Wholesale Inventories -0.4%
  • Wholesale inventories were $896.2 billion, a decrease of -0.4% from February 2024.
  • Year-over-year, wholesale inventories were down by -2.1% from March 2023.
  • The monthly change from January to February 2024 was revised slightly from a 0.5% increase to a 0.4% increase.
• Advance Retail Inventories ex air -0.1%
  • advance retail sales ex air -0.1% versus +.3% last month
  • Retail inventories were $788.1 billion, an increase of 0.3% from February 2024.
  • Year-over-year, retail inventories were up by 4.4% from March 2023.
  • The monthly change from January to February 2024 remained unrevised at a 0.5% increase.

WSJ Timiraos: “The Dream of Fed rate cuts is slipping away”

• Wall Street Journal’s Timiraos

The WSJs Timiraos is out with an article titled “The Dreams of Fed rate cuts is slipping away”.

A summary of the article says:

Fed Chair Jerome Powell and Inflation Expectations:

• Powell has reduced expectations for interest rate cuts.
• Recent economic reports have consistently shown inflation being more persistent than initially expected, contradicting hopes for significant rate reductions soon.

Economic and Inflation Data:

• Commerce Department data revealed inflation has been stickier than anticipated for three consecutive months, following a period of relative improvement.
• Growth has been more resilient, with GDP growing at a 1.6% annual rate, while underlying demand suggested a stronger 3% rate.

Inflation Trends and Adjustments:

• Core inflation for Q1 rose at a 3.7% annualized rate, with a year-on-year increase of 2.9%.
• Upcoming price data for March is expected to show continued strong inflation, potentially revising January and February’s data higher.

For the full article CLICK HERE.

Goldman Sachs: The composition of the GDP report was not as soft as it looked

• Goldman Sachs after today’s GDP

Goldman Sachs highlights that the composition of growth wasn’t as soft as the headlines (+1.6% vs +2.4% exp).

“The contribution from inventories (-0.4pp vs. GS +0.2pp) and foreign trade (-0.9pp vs. -0.4pp) accounted for the bulk of the miss,” economists at Goldman write. “Indeed, domestic demand growth proceeded at a strong pace of +2.8% annualized. This reflected a double- digit pace of residential investment growth (+13.9%) and solid growth in consumption (+2.5%) and business fixed investment (+2.9%), the latter reflecting gains in two of the three capex subcategories (equipment +2.1%, intellectual property +5.4%, structures -0.1%).”

US Treas Secretary Yellen: GDP data shows straight a consumer investment spending

US Treasury Secretary Yellen in a interview with Reuters says:

• GDP data shows straight in consumer investment spending.
• US economy shows robust growth, firing on all cylinders
• There could be revisions to GDP data.
• I still see in underlying core drivers of economic activity considerable strength.
• We are on downward path for inflation.
• Rents have stabilized, but a lot of people still experiencing the upward adjustment to higher levels.
• I have no doubt that housing’s contribution to inflation will be coming down this year.
• Not seen that wage pressures are a source of inflation
• Certainly don’t see the economy as overheated.
• We’ve got a good strong US economy, lifting growth all around the world.
• Fed wants to see additional evidence of a sustainable decline in inflation.
• Methods are concerned with high cost-of-living.
• Biden’s top priority is to address high cost of healthcare, bring down drug prices.
• Feds first priority is to set monetary policy to be consistent with price stability
• Dollar has been strong, there are divergences with other countries.
• Key factor in dollars valuation is strength in the US economy, level of rates.
• My position has been that currency intervention is acceptable only in very rare and exceptional circumstances.
• We do have to have sustainable fiscal path
• We have enacted some deficit reduction despite divisions in Congress.
• Consumer spending in China is incredibly low.
• China exporting its way to full employment is not acceptable to the rest of the world.
• US experience China shock after China’s export surged to the US following its admittance to WTO
• China shock was a huge loss of manufacturing jobs in parts of the US that have not recovered.
• Part of the US have really been left behind, free trade has to be something that benefits people throughout the country.
• We would be prepared to use authority to sanction Chinese banks if necessary.

JP Morgan’s proprietary US Tactical Positioning Monitori points to promising S&P 500 setup

• Historically leading to 3% gains in 20 days.

This comes via a Bloomberg article (gated) conveying info from JP Moprgan:

• their proprietary US Tactical Positioning Monitor, which measures clients’ exposure to US equities, hit a level that reflects an “attractive set-up” for the snp500
• the gauge has historically gained approximately 3% in the subsequent 20 days after a similar four-week change in positioning, compared to circa ~1% gain in all periods.

Bloomberg add that their own info shows investors have pulled around US$200 million out of value based exchange-traded funds this month:

• growth stocks have attracted more than US$3 billion in inflows

S&P 500 rate of earnings surprises the highest since Q3 2021

• UBS on equities, Q1 projections looking promising.

A snippet from UBS analysts on US stocks, looking for the strongest quarterly earnings growth in over two year.

UBS acknowledge that earnings season is still ongoing, but so far earnings are beating estimates by over 8% (8.3%) in aggregate.

Q3 2021 was 9.7%, this quarter is the best since then. UBS project Q1 earnings will improve further as more come in:

• “on pace for 9.3%, assuming the historical beat rate of 4.8% for the rest of this season”

Canada Feb average weekly earnings 4.53% vs 3.88% prior

• Canadian February wage data
• Prior was 3.88% (revised to +3.74%)

Commodities

Gold glitters as US economy stumbles and inflation soars

• Gold prices climb following US Q1 GDP results falling below expectations.
• Sharp increase in Q1 inflation to 3.7% tempers expectations for immediate Fed rate cuts and underpins higher Treasury yields.
• Fed officials maintain cautious stance on monetary policy, echoing concerns over persistent inflation pressure.

Gold prices advanced modestly during Thursday’s North American session, gaining more than 0.5% following the release of crucial economic data from the United States . GDP figures for the first quarter of 2024 missed estimates, increasing speculation that the US Federal Reserve could lower borrowing costs. However, inflation for the same period jumped sharply, which would delay interest rate cuts by the Fed.

The yellow metal trades at $2,330 after bouncing off daily lows of $2,305 amid higher US Treasury yields, courtesy of the reacceleration of inflation. As expected by analysts, the US economy would slow down in 2024, but it missed the mark by a full percentage point in the first quarter. That would keep the “soft landing” narrative in place, but underlying inflation for Q1 2024 rose by 3.7% QoQ, above estimates and crushing the 2% registered in the last quarter of 2023.

Spot gold is now up over 1%

• The 100-day moving average comes in at $2335.17

Gold price is seeing a push to the upside with the price now up $28.44 or 1.23% at $2343.68. The high price just reached $2344.89 new high for the day.

That move to the upside has now taken the price back above its 100 hour moving average at $2335.13. Stay above that moving average would be more bullish with the 200 hour moving out at $2356.62 as the next key tactical target.

The high price of gold reached $2431.78 back on April 12. That is the new all-time high price for the precious metal.

The corrective low which stalled at $2291 on Tuesday of this week, bottomed just above its 50% midpoint of the move up from the March 18 below. That midpoint level comes in at $2288.74. Buyers were ready to stick a toe in the water against that midpoint level.

Gold remains a safe haven. 

Crude oil settles at $83.57

• Up $0.76 or 0.92%

Crude oil is settling at $83.57. That’s up $0.76 or 0.92%.

Technically, looking at the price action on the hourly price below, like the USD, it too has been quite up and down volatile. Yesterday, the price found support against its 100-hour moving average. Today, the moving average was broken on its way to a low near $82 (low was at $81.99).

Going forward if the 200-hour moving average can hold support the buyers can push higher with the 50% of the move down from the high currently at $84.19.

Goldman Sachs raises Brent crude oil price forecasts for 2024 and 2025

• Nudged up to $86/bbl and $82 from $85 and $80 previously

Goldman Sachs has lifted its H2 2024 and 2025 Brent crude oil price forecasts higher:

• US$86/bbl and $82/bbl respectively
• from previously at $85 and $80

In a note Tuesday Goldman Sachs said it expects further moderation in the still-elevated geopolitical risk premium of $5-10 per barrel for crude oil in the coming months

• still holds a range-bound view
• sees a build in landed crude inventories over the past month as crude oil on water unloads on land
• “Inventories are rising in our tracking of OECD landed stocks—a key driver of oil prices—as large prior builds of oil on water (partly as a result of Red Sea rerouting) are now unloading on land, reducing physical tightness.”

EU News

Major European indices close lower

European indices are closing lower on the day:

• German DAX, -0.91%
• France CAC, -0.93%
• UK FTSE 100, +0.48%
• Spain’s Ibex, -0.40%
• Italy’s FTSE MIB, -0.97%

European yields are also higher:

• German 10 year yield reached a high of 2.647%. That was the highest level going back to November 27. Current yield 2.67%
• France’s 10-year yield also moved to its highest level since the end of November. It currently yields 3.127% after reaching a high of 3.149%.
• UK 10-year yields reach its highest level since November 3. It’s high-yield today reached 4.396% (currently at 4.37%).
• Italy 10-year reaches its highest level since December 12, 2023. The high-yield Ridge 4.035%. It is currently trading just below 4% at 3.998%.

Germany May GfK consumer sentiment -24.2 vs -26.0 expected

• Latest data released by GfK – 25 April 2024
• Prior -27.4; revised to -27.3

The breakdown shows that:

• Willingness to buy -12.6 (previously -15.3)
• Income expectations 10.7 (previously -1.5)
• Business cycle expectations 0.7 (previously -3.1)

France April business confidence 99 vs 100 prior

• Latest data released by INSEE – 25 April 2024
• Prior 100
• Manufacturing confidence 100
• Prior 102; revised to 103
• Services confidence 100
• Prior 102; revised to 103

UK April CBI retailing reported sales -44 vs 2 prior

• Latest data released by CBI – 25 April 2024
• Prior 2

ECBs Panetta: We must weigh risk of monetary policy becoming too tight

• Dovish comments from ECBs Panetta
• We must wait risk of monetary policy becoming to tight.
• Timely, small rate cuts would counter weak demand, and would be paused at no cost.
• Hesitations in adjusting rates would hurt investment productivity.
• Rate cuts could create a credibility issue

ECB’s Schnabel says may be facing a bumpy last mile on disinflation

• Remarks by ECB executive board member, Isabel Schnabel

The narrative for the ECB is that they will at least act in June. But after, they may take some time to pause a little and that is what’s up with all the recent commentary on “sticky inflation”.

Czech central bank vice-governor sees a rate cut, perhaps as much as 50bp, at next meeting

• But does warn of services inflation

Czech National Bank Vice-Governor Eva Zamrazilova says the Bank could cut interest rates by 25 or 50 basis points at its May 2 meeting.

• increases in services prices were an inflation risk
• “That is also a reason why I am cautious when it comes to cutting interest rates,” she said. “I have a cut by 0.25 or 0.5 percentage points in my head. I will see what the (new) situation report shows, but certainly (the cut) will not be sharper”

Asia-Pacific-World News

US encourage Europe & Asia alliesto tighten restrictions on chip related technology China

• FT source reporting

The US is encouraging Europe and Asia allies to tighten restrictions on chip related technology and tools to China. Report says US is concerned about rising concerns about hallways development of advanced semi conductors.

Wants other countries to make it harder for China to circumvent US restrictions specifically making it more difficult for companies from third countries to supply China with items that include technology produced in Japan and South Korea or the Netherlands

PBOC sets USD/ CNY reference rate for today at 7.1058 (vs. estimate at 7.2472)

• The previous close was 7.2461

PBOC injects 2bn via 7-day RR, sets rate at an unchanged 1.8%

• 2bn yuan of RRs mature today
• thus net neutral on the day in OMOs

Latest China crackdown ICYMI – brokers told to limit exposure to “snowball” derivatives

• China ramping up regulation of these derivatives products.

China is taking steps to regulate the derivatives market, targeting “snowball” derivatives.

• Authorities have instructed some of the largest brokerages to halt any increase in their net exposure to over-the-counter derivatives involving domestic A shares, including snowball products.
• Snowballs have seen a surge in interest.
• While the restrictions are said to be temporary no indication was given for an end date on curbs.

Australia’s inflation nightmare – Australia’s inflation rate is the highest globally

• The Reserve Bank of Australia is like a ‘roo in the headlights

Analysts at a top Australian investment banking firm, Barrenjoey Capital Partners, point out that Australia’s recent inflation performance is just about the worst on the planet:

• “Using the trimmed mean is preferable – Australia’s six month annualised rate of trimmed mean inflation of 3.6% is the highest inflation globally (higher even than the US at 3.2% 6mAR trimmed).”

Via Commonwealth Bank of Australia:

• yield on the three‑year Australian government bond jumped by 13bp to 4.03%
• Interest rate markets are now pricing only a small chance of a sole 25bp rate cut by the end of the year

TD say to forget about a Reserve Bank of Australia rate cut in 2024 due to:

• strong employment market
• ongoing high migration into Australia
• rising energy prices
• “The RBA is likely to adopt a more hawkish stance, but one that it’s loath to act upon,”
• expect the first cut now in February 2025

ANZ sticks to their forecast for a November 2024 interest rate cut from the RBA

• A November rate cut is the bank’s base case, but the risk is later

In response to higher than expected CPI data from Australia in Q1 2024, ANZ’s take:

• We think the RBA will want to see a couple of quarters of lower non-tradables and services inflation to be convinced that overall inflation will not only return to the 2–3% target band but remain there,
• our base case remains a November start to RBA rate cuts
• today’s Q1 CPI is consistent with the risks around that being skewed towards a later start

Japan’s economy minister to attend BOJ policy meeting tomorrow

• Yoshitaka Shindo will be in attendance at the Japanese central bank’s meeting on Friday

It is not commonplace for government officials to attend any central bank meeting, so this is definitely a peculiar one. But I guess it speaks to the delicate situation regarding the Japanese yen at the moment. The last time this happened was back in December last year, and before that was all the way back in April 2020 during the pandemic.

Japan chief cabinet secretary Hayashi: rapid FX moves undesirable, ready for full response

Japan chief cabinet secretary Hayashi:

• Won’t comment on forex levels or forex intervention
• Important for currencies to move in stable manner reflecting fundamentals
• Rapid fx moves undesirable
• Closely watching fx moves
• Will be ready to take full response
• Expect BOJ to work closely with govt
• Expect BOJ to conduct appropriate monetary policy to sustainably, stably hit its price target, working closely with govt

South Korea regulator head says does not know when to remove the short selling ban

• June was a likely date, but looks uncertain now

Head of South Korea’s market regulator says its difficult to say at the moment when to lift stock short selling ban

The ban was announced back in November, with June floated originally as the potential end date.

Cryptocurrency News

Bitcoin price continues to get rejected from $65K resistance as SEC delays decision on spot BTC ETF options

• Bitcoin price rejection from $65,000 resistance continues after failure to reclaim it as support.
• Liquidity pool below $60,000 continues to act as magnet for BTC toward proper market balance.
• US SEC has delayed decision and opened comment period on whether or not to allow options trading on spot BTC ETFs.

Bitcoin has markets in disarray, provoking a broader market crash as it slumped to the $62,000 range on Thursday. Meanwhile, reverberations from spot BTC exchange-traded funds (ETFs) continue to influence the market.

SEC delays decision on spot Bitcoin ETF options trading

The US SEC has delayed a decision on whether or not to allow options trading on spot BC ETFs. It basically means that they need more time to review and analyze the proposal. The SEC may have concerns about potential risks, market manipulation or other regulatory issues associated with introducing options trading on these ETFs.

Delays in such decisions are common as the financial regulator works to ensure investor protection and market integrity. Alongside the delay, it has opened a comment period but in the meantime markets will be keen to wait for further updates from the SEC or the relevant parties involved in the proposal to understand the reasoning behind the delay and any potential implications for investors.

Ripple wipes out weekly gains, experts comment on role of Ripple stablecoin

• Ripple extends decline to $0.52 on Thursday, wipes out weekly gains. 
• Crypto expert asks Ripple CTO how the stablecoin will benefit the XRP Ledger and native token XRP. 
• Attorney Bill Morgan warns market participants of the consequences of a lawsuit decision that stops XRP usage in ODL.

Ripple declined to $0.52 on Thursday, erasing all gains registered earlier this week. Ripple Senior Vice President Eric van Miltenburg’s comments on the firm’s stablecoin, and how it is expected to benefit the XRP Ledger and native token XRP have raised concerns among crypto experts. 

XRP price has been declining since Tuesday, following Ripple’s response filing to the SEC’s request for $2 billion in penalties.

Ripple holders digest stablecoin news and response to SEC filing

• XRP price wiped out Monday’s gains as holders digested the announcement of Ripple’s stablecoin and the firm’s response to the SEC’s request for $2 billion in fines. 
• Ripple SVP told the Digital Frontier that Ripple plans to launch its stablecoin on the XRP Ledger, “which will ultimately be good for the ecosystem.” Miltenburg supports his claim citing Polygon’s example of how the introduction of stablecoins increased the Total Value Locked (TVL) on the chain and improved trust. 

Ethereum looks set to resume consolidation as SEC may not approve spot ETH ETFs

• Ethereum longs could suffer a hit as inside sources have told Reuters that the SEC will likely deny a spot ETH ETF.
• Issuers may go to court to force SEC’s hand.
• Whales remain positive on Ethereum despite recent price setbacks.

Ethereum appears to have returned to its consolidating move on Thursday, canceling rally expectations. This comes after insider sources informed Reuters of the unlikelihood of the SEC approving a spot ETH ETF in May.

Spot Ethereum ETFs unlikely

Ethereum spot ETFs are in the news today following recent unveilings. Here are key Ethereum market movers for today:

• While Hong Kong has approved spot ETH ETFs to go live on April 30, the US SEC seems set to take an opposite move. According to Reuters, a group of unnamed individuals who participated in a meeting between issuers and the SEC claimed the regulator’s staff didn’t discuss specific details about the product. The individuals claimed that issuers argued that the SEC’s approval of futures ETH ETF in May “set a precedent for spot Ether products.”
  
• Chief legal officers of Coinbase and Grayscale, Paul Grewal and Craig Salm, respectively, have also maintained the same position. The individuals said while SEC staff listened, they didn’t ask questions or raise any concern, suggesting the regulator would deny the filings, stated Reuters. Bloomberg analysts Eric Balchunas and James Seyffart have earlier lowered their odds of a spot ETH ETF approval in May, stating the SEC’s lack of engagement as the major reason.
  
• One of the sources told Reuters, “It’s entirely possible we’ll eventually see Ether ETFs. But not until somebody is denied and goes to the courts.”
  The president of The ETF Store, Nate Geraci, has previously stated that the SEC may face a lawsuit if it fails to approve spot ETH ETFs.

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