Round up of today's market news *

North American News

Nasdaq Surges to Historic High, Shattering Previous Records

S&P index comes up short

The Nasdaq index is closing the day at a new record level. The old record was at 16442.20. The S&P stretched toward it’s record level at 5254.34, but closed above 8 points short of the level.

The final numbers are showing:

Dow Industrial Average average rose 126.60 points or 0.32% at 39558.12.
S&P index rose 25.28 points or 0.48% at 5246.69
NASDAQ index rose 122.94 points or 0.75% at 16511.18.

The small-cap Russell 2000 rose 23.57 points or 1.14% at 2085.69.

The price of Gamestop is closing up 60.10% up $18.30 but was up as much as $34.38.AMC close up close to 32% or $1.66. It was up as much as $6.69 before tumbling lower. Nonetheless it was a positive for the Meme stocks once again.

US April PPI +2.2% y/y vs +2.2% expected

April 2024 US producer price index

Prior was +2.1% y/y
PPI final demand +0.5% vs +0.3% expected
Prior was +0.2% (revised to -0.1%)
PPI ex food/energy +2.4% vs +2.4% y/y expected
PPI ex food/energy +0.5% vs +0.2% m/m expected
Prior ex food/energy +0.2% (revised to -0.1%)

US credit card balances rose 13.1% year-over-year in the first quarter

That’s a sign of rising stress

A New York Fed report is out on household debt:

Overall debt up 1.1% in Q1
Q1 mortgage balances rise $190 billion

Goldman Sachs: Here is what we expect from the US April CPI print

Goldman Sachs on Wednesday’s CPI report

Goldman Sachs predicts a subtle deceleration in the US core CPI for April, projecting an increase of 0.28%, slightly below the consensus expectation of 0.3%. This forecast suggests a cooling from the 0.37% average increase observed in Q1, potentially impacting future monetary policy decisions.

Key Points:

Core CPI Slowdown: Expected to rise by 0.28% in April, marking a slowdown from the first quarter’s average of 0.37%.
Transportation Costs: Anticipated decreases include a 2.5% reduction in airfares and a 0.8% drop in used car prices, with new car prices expected to remain stable.
Housing Costs: Rent is forecasted to increase by 0.37%, with Owners’ Equivalent Rent (OER) expected to rise by 0.45%.
Insurance and Services: Car insurance rates are expected to decelerate to 1.6% (from 2.6% in March), while health insurance rates are projected to remain flat.Tax preparation services are expected to provide a 2bp boost.
Energy and Food Prices: Energy prices are projected to increase by 1.7%, and food prices by 0.3%, contributing to an overall headline CPI rise of 0.37%.
Annual Core CPI Adjustment: The forecast would lower the year-on-year change in the core CPI by two tenths to 3.6%.

Home Depot sees softening demand for large projects

Comments in the Q1 earnings call

Home Depot reported earnings today and shares are down 0.8%.Their guidance is for comp sales to fall 1.0% this year.

“We saw big ticket pressure this quarter,” CEO Edward Decker said. “The dynamic we started to see late last year was a deferral of large-ticket projects and that has increased.”

“Anything that’s financed, we continue to see weakening demand,” CFO Richard McPhail said.

“We are seeing interest rates weigh on the consumer,” McPhail said.

The company was asked about inflation and said it sees ‘a very stable’ environment of tame inflation, including in commodity prices.

US April NFIB small business optimism index 89.7 vs 88.5 expected

Latest data release by NFIB – 14 May 2024

Prior 88.5

That’s the first increase in the index for the year but it continues to sit below the 50-year average of 98 for a 28th month running. Looking at the details, 22% of business owners reported that inflation was their single most important problem – down 3 points from March.

A summary of the comments from Fed Chair Powell at the Netherlands Bankers Association

Fed Chair answered a series fo questions on many topics.

He did comment that the PPI data from earlier today was mixed. He characterized the housing inflation as puzzling. He does expect that inflation will come down toward the 2% target as policy remains restrictive. He does admit that the could take longer than expected to get inflation down.He said the economy was performing well and that consumer spending and business investment was strong.Unemployment and labor market remains very strong, but the sees signs of gradual cooling.

Below is a summary by topic:

Current Policy Rate:
- The current policy rate is restrictive.
- Likely to hold policy rate where it is rather than reduce it.
- Fed will keep policy at the current rate for longer if needed to manage inflation.
- Confidence in lowering inflation is lower than before, but progress has been made.
- Fed focuses on present policy rather than longer-term neutral rates (R-star).
Credibility:
- Credibility is essential for central banks, achieved by fulfilling mandates and avoiding politically fraught issues.
- Credibility also comes from sticking to convictions.
- There is strong bipartisan support in Congress for an independent Fed.
Policy Goals:
- The Fed aims to return inflation to 2%.
- Need to be patient and let policy work.

Inflation

Current Situation:
- Q1 showed a lack of further progress on inflation.
- PPI reading was mixed.
- Housing inflation is puzzling; current rent increases are not yet reflected in rollover leases.
- Non-housing services inflation may take the longest to decrease.
Expectations and Challenges:
- Inflation may take longer than expected to come down.
- Expect inflation to move back down, though it requires patience.
- Homeowners and businesses locked in lower rates, reducing the immediate impact of policy.
- Real progress has been made on inflation.

Consumer Spending/Growth/GDP

Economic Performance:
- The US economy is performing well.
- Consumer spending and business investment are strong.
- Expect continued GDP growth of 2% or better.
Post-Pandemic Economy:
- Post-pandemic economy has surprised everyone with its resilience.
- Overall, the economic data shows a good picture so far.

Employment/Labor Market

Current Conditions:
- The US economy has a very strong labor market.
- The labor market is now as tight as it was before the pandemic.
- Labor shortages persist in many industries.
Trends and Changes:
- Signs of gradual cooling in the labor market with supply and demand getting into better balance.
- Immigration is helping alleviate labor shortages.
- Demand for workers and wages are cooling off substantially, indicating restrictive policy is effective.

Banking and Banking Risk

Current State:
- US banking system overall is in good shape.
- Largest banks are strong and well-capitalized.
- Credit has been tight for some time.
- Credit growth has been modest.
Nonbank Financial Firms:
- Lending activities by nonbanks are growing very fast.
- Fast growth in any sector raises financial stability concerns.
- The Fed monitors the relationship between banks and non-bank financial firms closely.

Housing Market

Inflation Issues:
- Housing inflation remains puzzling.
- Current rent increases are not showing up in rollover leases as expected.
- There are longer-than-expected lags between market rate declines and their appearance in leases.

There are warning signs for risk trades in the latest survey of fund managers

The latest monthly fund manager survey from Bank of America Securities

The monthly fund manager survey from Bank of America Securities is another warnings sign. BofA investment strategist Michael Hartnett said was the “most bullish Fund Manager Survey since November 2021, which is notable because stocks peaked in the following Dec/Jan.

He said the optimism is driven by rate cuts rather than earnings growth. The risk there is that rate cuts or hints at rate cuts become a ‘sell the fact’ trade, especially if that comes with a weak economy.

The survey showed that 80% of managers still see cuts in the second half of the year and no recession.

Cash levels are down to just 4.0%, which is a 3-year low and stock allocations at the highest since January 2022 (when markets peaked).

Hartnett said sentiment is not yet at “close-eyes and sell” levels but markets are vulnerable, especially since expectations on global GDP and EPS are sliding.

The most-crowded trades:

Long Magnificent 7 (51%)
Long US dollar (12%)
Short China equities” (11%)

In terms of moves, the survey showed modest defensive rotation in May (to staples from industrials). Hartnett notes that in absolute terms investors have big overweight positions in stocks (large cap growth), health care, tech, Europe, commodities and big underweight allocations in REITs (largest since Jun’09), utilities, UK, discretionary, bonds.

Goldman Sachs still like US stocks – upside risks look greater than the downside risks

The S&P 500 Index already is higher than Goldman’s year-end target

Ben Snider, senior strategist on Goldman’s US portfolio strategy team, spoke in an interview:

fundamental backdrop for share prices remains “very good,”
cites strong earnings from US companies, confidence in continuing disinflation
upside risks look greater than the downside risks at this point … one very clear upside risk is will have to raise earnings forecasts further
bullish over the long term but expects little to no gains from here in 2024 (the S&P 500 Index already is higher than Goldman’s year-end target of 5,200)

Info comes via Bloomberg, gated.

HSBC say dip in risk assets is “increasingly in the rear view mirror” – back to Goldilocks

Adds that US CPI data will not need to beat to fuel another risk rally

HSBC says US stocks are moving past the pull back in April:

dip in risk assets is increasingly in the rear-view mirror
many major equity indices are re-approaching year-to-date highs
broad-based gains once again resemble a Goldilocks-style rally

Commodities

Gold price surges above $2,350 amid hot US PPI, Fed Chair Powell’s hawkish stance

Gold jumps 0.97% after US producer price data shows higher-than-expected inflation.
Despite a spike, Treasury yields reversed to 4.445%, weakening Greenback and boosting Gold.
Powell’s waning confidence in disinflation and optimistic GDP outlook of 2% or more fuel Gold’s rise.

Gold prices climbed past the $2,359 figure on Tuesday after data released by the US Department of Labor revealed that factory gate inflation rose above estimates, signaling that prices remained elevated. Despite that, US Treasury yields are sliding, a headwind for the Greenback.

The yellow metal trades at $2,359, up 0.97%.

Crude oil settles at $78.02

Down $1.10 or 1.39%

Crude oil futures are settling at $78.02.That is down -$1.10 or -1.39%. The high price reached $79.35. The low price reached $77.71.

The price is closing below its 100-day moving average for the second time in three days. The moving average comes in at $78.42. The low price today stalled just ahead of the 50% midpoint of the move up from the low in December. That midpoint comes in at $77.66.

Natural Gas steady despite profit taking at elevated level

Natural Gas prices received a rejection at $2.53 though is able to contain losses.
Geopolitical risks ease a bit while the Qatar Economic Forum gets underway.

NatGas has given traders a nice run, rallying 40% since the end of March.This movement partially came on the back of Israel and its continuing attacks on Gaza.With pressure building from world leaders, calling out Israel to at least have a ceasefire, tensions are likely to ease from here. Meanwhile, Europe has secured enough Gas supply before the next heating season and ahead of the substantial longer-term measures that will kick in as of 2025 in 2028, making the bloc independent from Russian Gas.

Natural Gas News:

The Qatar World Economic Forum started on Tuesday morning. Headlines from world leaders may come out throughout the week. Prime Minister of Qatar, Mohammed bin Abdulrahman Al Thani, already kept an opening statement, condemning Israel’s approach towards Gaza and calling for peace and a ceasefire to work out a deal that works for all parties, Bloomberg Television broadcasted.
The OPEC Monthly Market Report will be released on Tuesday.Although it deals with Oil, the energy complex as a whole might face some head or tailwinds from any outlook or firm changes in its policy.
Germany will need to diversify its energy capacity by building new gas-fired plants as Bloomberg calculated that 25% of the current coal plants are set to close by the end of the year.
The Freeport LNG plant is producing Liquified Natural Gas at the highest level in six months after a prolonged period of unforeseen outages and maintenance.Currently, the three production trains are jointly producing 2.09 billion cubic feet of Gas per day, Reuters reports.

Copper prices hit a record, breaking $5 per pound for the first time

May and June copper prices hit $5 today

The May and June US copper contracts both touched $5 per pound today, a record high for the the metal. The latest leg is also benefiting from current and future demand for data centers and electricity in general.In addition, China’s economy is improving and it’s responsible for about 50% of global copper demand.

Notably though, today’s price action has been volatile. After starting at $4.80, it surged to $5.04 only to retrace to $4.91. A close above $5 would add some confidence for the bulls.

OPEC leaves world oil demand growth forecast unchanged in latest monthly report

OPEC sees world oil demand growth at 2.25 mil bpd in 2024 and 1.85 mil bpd in 2025

Both the forecast numbers are unchanged compared to the month before. The bloc notes that despite some downside risks, there is further upside potential for global economic growth this year.

EU News

France’s CAC closes at a new record level

German Dax moves lower today

The major European stock indices are close mostly higher. The one exception is the German DAX. France CAC rose by 0.20 percent which was good enough for a new record high close. The UK FTSE 100 closed higher but fell short of its record high level reached on Friday at 8433.75. It closed at 8428.14.

A summary of the closing levels shows:

German DAX, -0.14%
France CAC, +0.20%
UK FTSE 100 100, +0.16%
Spain’s Ibex, 0.78%
Italy’s FTSE MIB, 0.96%

Germany April final CPI +2.2% vs +2.2% y/y prelim

Latest data released by Destatis – 14 May 2024

Prior +2.2%
HICP +2.4% vs +2.4% y/y prelim
Prior +2.3%

Germany May ZEW survey current conditions -72.3 vs -75.8 expected

Latest data released by ZEW – 14 May 2024

Prior -79.2
Economic sentiment 47.1 vs 46.0 expected
Prior 42.9

UK March ILO unemployment rate 4.3% vs 4.3% expected

Latest data released by ONS – 14 May 2024

Prior 4.2%
Employment change -177k vs -220k expected
Prior -156k
April payrolls change -85k
Prior -67k; revised to -5k
Average weekly earnings +5.7% vs +5.5% 3m/y expected
Prior +5.6%; revised to +5.7%
Average weekly earnings (ex bonus) +6.0% vs +5.9% 3m/y expected
Prior +6.0%

Spain April final CPI +3.3% vs +3.3% y/y prelim

Latest data released by INE – 14 May 2024

Prior +3.2%
HICP +3.4% vs +3.4% y/y prelim
Prior +3.3%

ECB’s Knot: Highlights how US pandemic decisions were productivity-enhancing

Comments from Knot

I’m increasingly confident that inflation will come back to our target
We’re seeing better signs on services
June may be a good opportunity for first rate cut
We will decide meeting by meeting after June
It’s not likely we’ll move back to persistently low inflation and low rates

ECB’s Wunsch: High rates for longer from the Fed might lead to a slower pace of cuts

Wunsch also said they should proceed gradually after cutting in June and refrain from committing to a second cut.

BOE’s Pill: We can cut interest rates while maintaining restrictive policy stance

Remarks by BOE chief economist, Huw Pill

There is still some work to do on inflation persistence
Making good progress on returning inflation to target
But there is still some work to do to get it back to 2% level
Focus is on labour market, pay growth, and services prices
Labour market remains pretty tight by historical standards
Need to keep a restrictive stance on monetary policy
That is to bear down on domestic inflation persistence
Not unreasonable to believe that over the summer we will have enough confidence to consider rate cuts
Rate cut likely to come under consideration in the summer

Asia-Pacific-World News

US unveils steep tariff hikes on Chinese chips, cars

The new measures will impact roughly $18 billion in Chinese imported goods, according to the White House

Tariff rate on certain steel, aluminum products under Section 301 to increase from 0-7.5% to 25% in 2024
Tariff rate on semiconductors to increase from 25% to 50% by 2025
Tariff rate on electric vehicles to increase from 25% to 100% in 2024
Tariff rate on lithium-ion EV batteries to increase from 7.5% to 25% in 2024
Tariff rate on lithium-ion non-EV batteries to increase from 7.5% to 25% in 2026
Tariff rate on solar cells to increase from 25% to 50% in 2024

China expresses strong dissatisfaction to US tariff hikes

China responds after the US announced some steep tariff hikes on roughly $18 billion Chinese goods earlier

China will take resolute measures to defend its rights and interests
Calls for US to immediately correct its ‘wrongdoings’ and cancel additional tariff measures
Tariff hikes violates Biden’s commitment to not suppress and contain China’s development

Russian president Putin to visit China later this week

Putin will be making a visit to Beijing and Harbin, according to the Russian media

The trip will take place on 16 to 17 May, will Putin also set to meet with Xi to hold talks and before “signing some documents”. Also, Putin will be meeting with China’s premier Li Qiang “to discuss economic cooperation”.

Reports from Chinese brokerages on recent bad credit data disappeared from media

April credit data

Via Bloomberg (gated) comes the report:

A series of research reports from Chinese brokerages on the country’s recent bad credit data disappeared from social media over the weekend.
At least seven research reports from mainland brokerages and securities firms that had been posted to WeChat by analysts were unavailable for viewing on Monday.
The link to six of the reports now leads to an error message saying the content couldn’t be viewed after complaints about unspecified violations of rules governing public accounts.

New Zealand Card retail sales (April) -0.4% m/m (prior -0.7%) & -3.8% y/y (prior -2.3%)

Card sales data is the main retail sales indicator from NZ

New Zealand Card Spending Total for April is +0.9%

prior +0.1%

Card Spending Retail:

-0.4% m/m

prior -0.7%

-3.8% y/y

prior -2.3%

Japan April PPI +0.9% y/y (expected +0.8%) & +0.3% m/m (expected +0.3%)

Japan data for wholesale prices

IMF says further, gradual, BOJ short-term rates hikes should continue, data dependent

The IMF compliments Japan’s long-standing commitment to flexible exchange rate regime

IMF Executive Board statement on consultation with Japan:

Further hikes in Japan’s short-term policy rate should proceed at a gradual pace and be data-dependent
Japan’s long-standing commitment to flexible exchange rate regime will help absorb shocks, support monetary policy’s focus on price stability
BOJ’s state-contingent purchases of JGBs will help mitigate excessive shifts in yields that could undermine financial stability during policy transition
Clear, effective communication strategy by BOJ that continues to underscore factors behind pace of rate hike will be key

BOJ to hold off next rate hike until September, says former central bank executive

Remarks by Kazuo Momma, who was in charge of the BOJ’s economic analysis and monetary policy drafting until 2016

Momma says that the BOJ is likely to want to wait until September at least before hiking rates again. That is so policymakers can gather more information from the government’s monthly wage data for July and August, to confirm whether or not the stronger wage hikes from the shuntō have passed through to households.

Adding that the BOJ will also probably want to align such a move with a further recovery in the economy.And that might only show up when the central bank gets to observe the Q2 GDP data.

He also notes that compared with ending negative rates, hiking them by another 25 bps would have a bigger impact on the general public with regards to mortgages and borrowing costs.

Japan Suzuki: Important for currencies to move in stable manner, reflecting fundamentals

Japan finance minister Suzuki

Japan finance minister Suzuki comments crossing:

Important for currencies to move in stable manner, reflecting fundamentals

Important for govt, BOJ to coordinate policy
Will take thorough response for forex
Closely watching fx moves

Cryptocurrency News

XRP climbs above $0.50 as Ripple files motion to seal documents in connection with SEC lawsuit

Ripple filed to seal documents filed by the SEC in its motion for judgement and remedies, on May 13.
The SEC has previously stated that it does not oppose Ripple’s request to seal documents.
XRP climbed above $0.50, adding 0.51% to its value on Tuesday.

Securities and Exchange Commission (SEC) lawsuit against Ripple saw an update as the payment remittance firm filed a motion to narrowly seal documents related to the remedies-phase.

In its May 13 motion Ripple states that the SEC has previously said that it does not oppose the firm’s request to seal parts of documents in the remedies-phase, and protect interests of involved parties.

Ripple files motion to seal documents

Ripple filed a motion by the May 13 deadline for Omnibus letter filings, seeking narrowly tailored redactions to the briefings of remedies motion and certain exhibits.
The firm states that its sealing requests are reasonable and consistent with the sealing requests that court has granted during the summary judgment phase of the lawsuit.
Ripple counsel conferred with the US financial regulator, prior to filing the motion on Monday.
The SEC stated that it accepts some of Ripple’s requests and may contest others.
Ripple seeks to redact information that could cause harm to the payment remittance firm, innocent-third parties and non-party Ripple employees if publicly disclosed, per the filing.
The firm seeks narrow redaction of documents that contain its audited financial statements and related documents.
The cross-border payment remittance firm’s argument is that its audited financial statements contain information that could reveal the company’s long-term plans, revenue streams and expense structures to its competitors and customers. Therefore the firm seeks narrow redactions to protect its interests.
The fintech firm is looking to redact names of its investors, customers, employees and business partners and asks the court to weigh the decision heavily in the interest of the privacy of these entities.

UBS owns 3,600 shares of BlackRock’s iShares Bitcoin Trust (IBIT)

In the news on Monday was this, that UBS owns 3,600 shares of BlackRock’s iShares Bitcoin Trust (IBIT)

UBS is good company, the list of authorized participants for BlackRocks’ IBIT also includes Citadel and Goldman Sachs

UBS does allow some of its clients to trade Bitcoin ETFs, but only those clients it asses as having a higher risk tolerance can access the new funds

It allows some of its affluent clients to gain exposure to cryptocurrency ETFs based in Hong Kong
UBS is good company, the list of authorized participants for BlackRocks’ IBIT also includes Citadel and Goldman Sach

PEPE rises 24% despite profit taking by whales

Early holder of PEPE deposited 250 billion tokens to centralized exchange Binance late Monday.
PEPE hit a new all-time high on Monday at $0.00001119 on Binance, in the spillover of GameStop trader Roaring Kitty’s return on X.
PEPE price climbed 24% in the past 24 hours despite profit taking by whales.

PEPE, a frog-themed memecoin with a market capitalization of over $4.4 billion, has noted a significant increase in its price in the past 24 hours.The gains are likely catalyzed the meme coin sector-wide rally inspired by GameStop trader Roaring Kitty’s return on X.

Meme coins ranked the top 30 by market capitalization and Solana-based meme coins with the name of “ROAR” and “GME,” not affiliated with the firm or the trader, noted massive gains.

PEPE records new all-time high, rallies despite profit taking

PEPE hit a new all-time high fifteen hours ago at $0.00001119 on Binance. In the past 24 hours, the frog meme inspired token added 24% to its value.

PEPE rallied alongside Dogecoin (DOGE), Shiba Inu (SHIB), Dogwifhat (WIF), Popcat (POPCAT), Floki (FLOKI), Bonk (BONK), Roaring Kitty (ROAR) and GameStop (GME), among other meme coins.

On Monday, the legendary trader behind the 2021 rally in GameStop, Roaring Kitty, posted an image on X. It was interpreted by traders as a return of the trader and ignited a rally in meme coins.

PEPE’s gains have sustained despite profit-taking by large wallet investors. Data shows that whales and early holders of the meme coin started taking profits as the meme coin hit its new all-time high. Early holder 0x647 deposited 250 billion PEPE worth $2.69 million to the centralized exchange Binance.

FLOKI rallies 9% on Tuesday, proposal to burn over 15.2 billion tokens is in the voting process

FLOKI DAO’s proposal to burn over 15.2 billion tokens is live and the community is voting.
The proposal has received a positive response from over 99% of the voters.
FLOKI added 9% gains on the day, climbing to $0.0001937 on Tuesday.

FLOKI holders are currently voting on a proposal to burn over 15.24 billion tokens, with 99% of the voters in favor of the event. The meme coin rallied 9% on the day on Binance.

The burn proposal is a part of continuous effort of the team to enforce decentralization in the governance of FLOKI.

FLOKI DAO collects votes on burn proposal

FLOKI ranked among trending topics on Grok, Elon Musk-led AI project, per the meme coin’s official tweet.The reason for FLOKI’s relevance among traders is likely the proposal for burning over 15.24 billion tokens worth nearly $3 million.

Typically, token burn is considered bullish for the asset since it reduces the asset’s circulating supply. The community has previously voted on three burn proposals: a burn of 190.91 billion FLOKI in February, 4.97 trillion token burns in January 2023 and July 2022.

In each case, FLOKI DAO members decided upon a burn and it was swiftly executed, reducing the circulating supply of the meme coin. Over 99% of the voters have voted positively on the proposal, per the snapshot. The vote is ongoing and will end on May 16.

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Round up of today’s market news

ByBilals Tech