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MAY 22, 2024

RISING ONCE AGAIN

BlackRock’s Bitcoin exchange-traded fund (ETF) in the U.S. has recently received a surge in investments as the price of Bitcoin climbs above $70,000. With over $290 million in inflows, yesterday was a remarkable day for the IBIT ETF as it recorded its highest one-day inflow in months. This uptick in activity follows a period of slower momentum earlier in the month. Now totaling over $19 billion in holdings, the IBIT ETF’s success coincides with positive outlooks for the cryptocurrency market, including expectations for the approval of an Ethereum ETF and optimistic sentiments towards digital assets from former President Donald Trump’s campaign. Furthermore, Grayscale’s GBTC ETF also displayed stability after a brief bout of outflows, suggesting a potential shift in investment patterns within the cryptocurrency landscape.

RETREAT AFTER GAINS

Metal prices, particularly gold and copper, are seeing a decline in value. Gold futures have slipped 0.3% to $2,419.4 per troy ounce, following a period of record highs before this recent drop. Traders are taking advantage of the high prices to sell and make a profit, as noted by analysts at SP Angel. The surge in gold prices was driven by strong activity in Asian markets and selling of reserves by Western countries. On the other hand, copper is also experiencing a downward trend, with prices falling 1.5% to $10,662 per metric ton after reaching a peak of $11,104.5 on Monday. Despite concerns of a short squeeze, it appears that current demand for copper is relatively low at the moment, according to SP Angel. Overall, the metal market is currently facing a period of retreat and readjustment after recent highs, with traders closely monitoring developments and seeking opportunities to capitalize on market movements.

SALES SLUMPED

Target has revealed that it faced a drop in sales and missed profit predictions as shoppers scaled back due to high prices. Despite revenue being on target, CEO Brian Cornell acknowledged weak sales in non-essential categories. To address this, Target revamped its loyalty program and slashed prices on everyday items, aiming to offer better value to customers. In addition, Target observed a decline in store traffic but signs of progress in apparel sales. Looking ahead, despite the disappointing quarter results, the company is still maintaining its annual forecast, anticipating modest sales growth and adjusted earnings. Moreover, it is worth noting that as with other retailers, Target is adapting to changing consumer habits, facing competition from discounters and inflation challenges, and since retailer initiatives like discounted prices and collaborations have generated positive responses, it suggests that there is still potential for growth despite market fluctuations.

CONSUMER PROTECTIONS

The Consumer Financial Protection Bureau declared that customers of buy now, pay later (BNPL) services, including leading firms Affirm, Klarna, and PayPal, are now entitled to the same consumer protections as credit card users under the Truth in Lending Act. This rule requires BNPL lenders to offer refunds, investigate disputes, and disclose fees transparently on bills. The move aims to address concerns of escalating consumer debt levels associated with BNPL transactions, which have surged tenfold from 2019 to 2021. While some BNPL providers like Affirm already comply with refund and dispute resolution requirements, the Bureau’s new regulations seek to standardize these practices across the industry, potentially leading to legal challenges from companies seeking to contest the rules.

INTERNATIONAL NEWS

Despite high optimism, UK inflation dropped to 2.3% in April, the lowest since July 2021, below the Bank of England’s 2% target. This unexpected decrease has cast doubt on the anticipated June interest rate cut, with services inflation easing only slightly and core inflation also dipping. As a result, a June rate cut now appears unlikely, nevertheless, a potential cut later in the summer remains on the table. The recent economic data has led to speculation among economists, such as those from Capital Economics, about the necessity and likelihood of an August rate cut. Moreover, Governor Bailey has reiterated the Bank of England’s commitment to maintaining political independence in determining the timing of the next rate adjustment, irrespective of the upcoming UK election. However, there is still uncertainty in the monetary policy landscape even after the news about the UK recovering, with growth recorded at 0.6% in the first quarter of the year. Furthermore, due to the disappointing results in the UK, the European Central Bank now seems to be the one with potential to start lowering rates first, as the Federal Reserve in the U.S. seems to be delaying any rate cuts until at least September.

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