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APRIL 16, 2024

SHIFT IN TREND

Bitcoin (BTC) has been experiencing a decline the last few days and this might be due to the shift from CoinDesk’s Indices Bitcoin Trend Indicator (BTI) as it changed from bullish to neutral, possibly hinting at a weakening of Bitcoin’s upward momentum. Since October 2023, the BTI had been indicating an uptrend as news of potential spot Bitcoin exchange-traded funds emerged, but now it has turned neutral. Moreover, the CoinDesk 20, which tracks major digital assets, was down by 4%. Nevertheless, despite the market dip, trading volumes remained strong, as there were no outflows from bitcoin ETFs last week except for Grayscale Bitcoin Trust ETF (GBTC), which had a total negative flow of $82.5 million as of April 15. As of now, BTC Spot ETFs are trading around $3.2 billion daily, and $16.2 billion weekly.

QUARTER SUCCESS

Morgan Stanley’s first-quarter profit surged, primarily fueled by robust investment banking performance, particularly in equity underwriting, leading to a net income of $3.4 billion, translating to $2.02 per share, a noticeable leap from $3 billion, or $1.70 per share, in the prior year. CEO Ted Pick celebrated the firm’s accomplishment of amassing $7 trillion in client assets, reflecting strong net new asset growth. Additionally, investment banking revenue saw a 16% increase, with fixed-income underwriting and equity underwriting standing out as bright spots, despite a decline in advisory revenue. Total revenue for the quarter reached $15.14 billion, showcasing steady growth in wealth management revenue to $6.9 billion. Moreover, the bank’s asset management unit aims to double its private credit portfolio to $50 billion in the medium term as it gathers resources from large investors for company lending endeavors.

PROFIT DIP

Despite Morgan Stanley reporting a strong performance, the banking sector continues to display struggles as the Bank of America (BofA) has announced a decrease of 18% in first-quarter profits compared to the previous year, mainly due to a decline in net interest income caused by higher deposit costs. The bank saw a 3% decrease in net interest income, with non-interest bearing deposits dropping by 16% and interest rates on U.S. interest-bearing deposits rising significantly. However, the bank’s Wall Street operations provided a bright spot in the midst of this challenge, with increased revenue from investment banking, trading, and wealth management exceeding analyst expectations. CEO Brian Moynihan highlighted record revenue from wealth management and a significant 35% increase in investment banking revenue compared to the previous year, indicating a positive performance in the bank’s financial services sector despite the overall profit decline.

RISING DOLLAR

The dollar is on track for its largest rally in over a year as investors anticipate prolonged high U.S. interest rates and seek refuge in the currency amidst heightened tensions in the Middle East. The Bloomberg Dollar Spot Index notched a fifth consecutive day of gains today, marking a roughly 2% increase, the most significant advance since February 2023. With betting on Federal Reserve easing starting in September, rather than July as projected a week prior, the dollar’s surge reflects a series of robust U.S. inflation reports disrupting market norms and enhancing market instability. Furthermore, Israel’s military officials’ declaration of retaliatory action against Iran’s recent military aggression has further fueled uncertainty, strengthening the dollar’s haven appeal.

GLITTER TO GLUM

Gold prices have experienced a decline due to the impact of high U.S. Treasury yields and investors taking profits following a recent surge. Consequently, gold prices dropped by 0.4% to $2,372.27 per ounce after reaching a record high of $2,431.29 last week. The rise in Treasury yields to 4.64% from Monday’s 4.66% was driven by strong U.S. retail sales figures, suggesting a slowdown in rate cuts for 2024. Nevertheless, it is still worth noting that gold has gained 15% in the current year, boosted by inflation expectations, geopolitical unrest, and increased central bank purchases, and experts such as those from Citi suggests the possibility of gold increasing within the next 6-18 months. In addition, StoneX analyst Rhona O’Connell recommends a “buy-on-dips” strategy for gold but advises against it for silver, platinum, and palladium, as they have all experienced price declines due to weakening industrial interest.

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