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MAY 17, 2023

CRYPTOS CONTINUE FALLING TREND

Cryptocurrency prices experienced a significant drop, with Bitcoin leading the way as it continued to retreat from its $30,000 level in April. This occurred due to a transaction backlog in May that resulted in a sharp plummet in Bitcoin’s price. As of now, Bitcoin has recovered from its two-month lows due to a minor increase in its current value, nonetheless, it has lost roughly 63% of its value for the year. In addition, although Ethereum remained stable at around $1,820 while other cryptocurrencies fell, its value has now followed the trend as its valuation has decreased below $1,800.

DEBT CEILING UPDATE

As the deadline for the U.S. debt ceiling approaches, negotiations between President Joe Biden and top congressional Republican Kevin McCarthy seem to have made some progress as talks appear to be moving in a positive direction. Although an agreement has not yet been made, both parties have come closer to a resolution that would prevent the negative consequences of a U.S. debt default. President Biden stated that they found common ground, agreeing that defaulting on the debt is not a viable option and could lead to a recession.

REGIONAL BANKS’ SHARES INCREASED

Despite recent concerns surrounding funding and the banking crisis, deposit levels at U.S. regional banks rose in early May, marking an upswing after four weeks of decrease. Western Alliance Bancorp reported that their deposit levels had exceeded $2 billion as of May 12, indicating that the recent banking crisis may not be worsening. As a result, the Bank of America Global Research deemed the bank as “resilient” in its business model and upgraded its rating to “buy”. Other regional banks, including PacWest Bancorp, Comerica Inc, Zions Bancorp, and KeyCorp, also experienced gains.

TARGET’S MIXED REPORT

Target’s earnings report exceeded estimates, despite weak sales growth due to shoppers buying more essential groceries and fewer discretionary items. Chief Growth Officer, Christina Hennington, pointed out that factors such as inflation, economic uncertainty, and people consuming all of their savings are influencing shoppers’ purchasing behavior. As a result, Target saw declines in its digital sales – as online orders usually consist of more discretionary items, but experienced better results for its physical stores’ sales. Furthermore, Target has maintained its full-year outlook of comparable sales ranging from a low single-digit decline to a low single-digit increase, and it expects full-year comparable sales growth of 0 to 2%.

INTEREST RATE EXPECTED TO CONTINUE INCREASING

The Federal Reserve is expected to keep its key interest rate unchanged this year despite a forecasted recession as the central bank insists that interest rates will remain high or may even go higher instead of being lowered as inflation exceeds the target rate and unemployment is at a low level. The U.S economy is likely to grow only 0.6 percent this quarter before shrinking in the last two of 2023, forecasting a mild recession which could bring inflation back down to target.

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