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MORNING & POST MARKET BRIEFING

  • MAY 23, 2024

    REGULATION BILL PASSED

    The cryptocurrency industry has achieved a significant milestone as the U.S. House of Representatives passed the Financial Innovation and Technology for the 21st Century Act (FIT21) in a 279-136 vote. This marks the first major crypto bill to clear a Congressional chamber as it heads to the Senate for further deliberation. The legislation aims to regulate the U.S. crypto markets, provide consumer protection, and define crypto tokens as securities or commodities, amidst debates on avoiding illegal activities and promoting accountability. Nonetheless, it is important to note that despite the bipartisan support for regulation, the future of the bill in the Senate remains uncertain due to lack of a counterpart bill and unclear support. In addition it is worth remarking that the U.S. lags behind other countries in establishing comprehensive crypto regulations, with challenges in implementing oversight. President Joe Biden opposed the bill but did not indicate a veto, while Securities Exchange Commission (SEC) Chair Gary Gensler raised concerns about its impact on existing securities regulations.

    OPTIMISM IN AI

    Following the release of the Nvidia’s most recent earnings reports, investors are optimistic about the future of artificial intelligence computing stocks. The chipmaker’s recent earnings report and forecast caused its shares to rise by 7%. In fact, Nvidia’s stock broke $1,000 for the first time, with a potential market value increase of over $100 billion. It is worth noting that this growth eased concerns about a potential slowdown in data-center equipment spending. In addition, the positive results from Nvidia also led to a rally in hardware stocks in the U.S., with companies like Super Micro Computer, Dell Technologies, Broadcom, Marvell Technology, and Advanced Micro Devices experiencing gains. Furthermore, semiconductor suppliers to Nvidia, such as Taiwan Semiconductor Manufacturing Co. and SK Hynix Inc., saw their stocks rise as well. Moreover, Nvidia’s announcement of a 10-for-1 stock split further fueled investor interest, and with the company’s CEO highlighting the growing demand for AI computing in various industries, a promising future for the technology market seems likely.

    UNCERTAINTIES LOOM

    During the Federal Reserve’s recent meeting, officials became increasingly worried about rising inflation levels following data indicating inflation exceeding expectations. Policymakers deliberated on the timing of potential interest rate reductions but lacked confidence in moving forward due to uncertainties about achieving the Fed’s 2% inflation target. Despite solid economic growth, officials noted the strain of inflation on lower-income consumers and highlighted increasing usage of credit cards and buy-now-pay-later services amid inflation pressures. Thus, concerns were raised about the need to tighten policy if inflation risks materialize. Fed officials emphasized the need for patience and good data before considering rate cuts, signaling a cautious approach to monetary policy adjustment. Moreover, officials expressed uncertainty about how long it would take for inflation to return to the target rate and the impact of high rates on this process. And as a result of this, market expectations for rate cuts have shifted, with a higher likelihood of a reduction in September but mixed views on a second move later in the year.

    UNEMPLOYMENT CLAIMS FELL

    Last week, the number of Americans filing new claims for unemployment benefits decreased, indicating a stable labor market that could continue to bolster the economy. The Labor Department reported that initial claims for state unemployment benefits fell by 8,000 to 215,000 for the week ending May 18, surpassing economists’ expectations of 220,000 claims. The ongoing rebalancing of the labor market, post a series of interest rate increases by the Federal Reserve since March 2022, reflects a steady effort to moderate demand throughout the economy. Moreover, the period covered by the recent claims data included the nonfarm payrolls element of the May employment report, showing relatively consistent claims levels between survey weeks in April and May. Further insights into the labor market’s status may be revealed in next week’s data on continuing claims – the number of people receiving benefits after an initial week of assistance – which rose by 8,000 to 1.794 million for the week that ended on May 11, according to the latest claims report.

    REBOUND BUT LOSSES PERSIST

    Oil prices have rebounded after a three-day decline, but are still on track for a weekly loss, with U.S. crude down 2.4% and Brent, the global benchmark, down 1.8%. Prices for West Texas Intermediate and Brent showed slight increases to $78.04 and $82.40 per barrel, respectively. Gasoline and natural gas prices also saw marginal gains. Moreover, despite concerns about global oil inventories following a mild winter in some regions, UBS remains optimistic about the market, forecasting a rise in Brent prices to $91 per barrel in the near future. The bank also expects a healthy demand growth of 1.5 million barrels per day in 2024, surpassing the long-term growth rate of 1.2 million barrels per day. Additionally, investors are cautious as fears of a wider conflict in the Middle East subside and focus shifts to supply and demand dynamics, with concerns about rising interest rates potentially affecting oil demand and the U.S. economy.

  • MARKET RECAP – MAY 22, 2024

    STOCK MARKET

    Dow Jones ended at $39,671.04 (-0.51%)

    S&P 500 ended at $5,307.01 (-0.27%)

    Nasdaq Composite ended at $16,801.54 (-0.18%)

    The stock market experienced losses across all major indexes due to concerns about persistent inflation raised by the minutes from the Federal Reserve’s May meeting. The possibility of the central bank not cutting interest rates soon led to a decline in the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite. Additionally, investors were looking ahead to Nvidia’s earnings report, causing the chipmaker’s stock to drop ahead of its release. Target’s weaker-than-expected earnings also contributed to the overall negative sentiment, raising concerns about consumer spending trends.

    CRYPTO MARKET

    Bitcoin rose by 0.31% for the day, with a value of $69,653.89 as of 3:00 PM CST, as stated by Coin Metrics.

  • 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.

  • MARKET RECAP – MAY 21, 2024

    STOCK MARKET

    Dow Jones ended at $39,872.99 (+0.17%)

    S&P 500 ended at $5,321.41 (+0.25%)

    Nasdaq Composite ended at $16,832.99 (+0.17%)

    The stock market witnessed gains across all major indexes, with the S&P 500 and Nasdaq Composite reaching new records, driven by investor excitement over Nvidia’s upcoming earnings report and the continued enthusiasm for artificial intelligence technology. Nvidia’s strong performance in the semiconductor industry has fueled expectations for another positive earnings report, prompting heavy investor positioning in the stock. In addition, the Dow Jones Industrial Average joined the upward trend too. However, it is worth noting that there is also a sense of caution reflected in options trading, where traders are anticipating a potential 9% swing in Nvidia shares based on the earnings report outcome. Moreover, despite some mixed performance from companies like Palo Alto Networks, overall market sentiment remains optimistic, with the focus now turning to Federal Reserve commentary and the potential impact of inflation data on future market movements.

    CRYPTO MARKET

    Bitcoin fell by 0.43% for the day, with a value of $69,341.87 as of 3:00 PM CST, as stated by Coin Metrics.

  • MAY 21, 2024

    OPTIMISTIC ABOUT APPROVAL

    Cryptocurrencies, including Ether and Bitcoin, have experienced a surge in value as optimism grew around the U.S. Securities and Exchange Commission (SEC) potentially approving spot ether exchange-traded funds. Despite previous bearish expectations in regards of the approval of Ether ETFs applications, investors are now hopeful, and as a result of this, Ether’s price has risen above the $3,700 mark, following a 20% jump, while Bitcoin is trading above $71,000 mark as of 8:00 AM CST. This positive market sentiment also affected related entities like Coinbase, Robinhood, and Bitcoin mining companies, which all saw gains in their stock prices. The final verdicts on applications from VanEck and Ark Invest are expected later this week, with other major firms like BlackRock and Fidelity also awaiting decisions on similar applications later in the year.

    STABILITY AMID UNCERTAINTY

    U.S. Treasury yields have been remaining  stable the last few days as investors analyzed the future trajectory of inflation and interest rates in light of commentary from Federal Reserve speakers. As of 8:00 AM CST, the 10-year Treasury yield was slightly down at 4.43%, with the 2-year yield just above 4.83%, reflecting investor concerns about the economic landscape and implications for interest rates. Federal Reserve officials have expressed caution regarding inflation, uncertain whether recent price increases are temporary or a lasting trend. Moreover, let’s remember that recent inflation data, which showed  a slight increase in prices has further fueled this uncertainty. Thus, investors are seeking clarity on when the Fed may adjust rates, with various officials scheduled to speak this week and minutes from the last Fed meeting forthcoming. Market watchers are also eagerly awaiting key economic indicators on existing and new home sales figures and durable goods orders to gain more insights into the current economic climate and potential policy changes.

    OVERVALUED HOMES

    Fitch Ratings has revealed that the majority of homes in the U.S. are currently overvalued, with prices inflated by 11.1% in nearly 90% of metro areas. This surge in prices is driven by a combination of factors, including years of underbuilding, a housing shortage, rising mortgage rates, and expensive construction materials. Moreover, the supply of available homes is still significantly lower than before the COVID-19 pandemic, leading to limited options for buyers, and although there have been some early signs of improvement in certain markets, high mortgage rates are continuing to impact the pace of home sales. Furthermore, eonomists believe that rates are likely to remain high in 2024 as although the current average rate on a 30-year loan is around 7.02%, down from a peak of 7.79%, it is much higher than pre-pandemic lows. As a result, many homeowners are hesitant to sell, further constraining the housing supply. In addition, the combination of expensive mortgage rates and elevated home prices has pushed the median monthly housing payment to a record $2,775, making it difficult for first-time buyers to enter the market. Thus, although there is strong demand and a robust labor market, high costs are preventing many from purchasing homes.

    QUARTER SUCCESS

    Macy’s has exceeded expectations in the first quarter, with revenue slightly surpassing estimates and adjusted earnings beating forecasts. And although there was Despite a 1.2% drop in same-store sales, CEO Tony Spring remains optimistic about the company’s progress, attributing it to investments in product quality, store presentation, and digital sales. Macy’s new strategy, “A Bold New Chapter,” focuses on closing underperforming stores, enhancing existing locations, and bolstering online sales. Moreover, looking ahead, Macy’s expects higher revenue and adjusted earnings for the year, though Wall Street analysts remain unsure about the company’s future success. Additionally, there is a potential buyout offer from Arkhouse Management and Brigade, which adds a layer of uncertainty to Macy’s trajectory. In response to continued sales declines, Macy’s is adapting to position itself for long-term success by aligning its operations with changing consumer preferences and market trends.

    INTERNATIONAL NEWS

    The UK is on the brink of a significant milestone as its inflation rate is projected to dip below the Bank of England’s 2% target from the current 3.2% level. This anticipated decline is primarily attributed to a sharp fall in April’s inflation figures, driven by a notable decrease in energy prices. And if the rate falls below 2% in April, experts predict further decreases to possibly 1.0% later in the year. Moreover, economists suggest that this decrease could have a significant impact on the decision to cut interest rates either in June or August. However, despite these optimistic expectations, it is important to highlight that there is still uncertainty surrounding services inflation, which could affect the timing of rate adjustments. Thus, market analysts as well as the Bank of England’s policymakers are keeping a close eye on the upcoming consumer price index release, to get a better idea of the appropriate timing for any forthcoming rate cuts.

  • MARKET RECAP – MAY 20, 2024

    STOCK MARKET

    Dow Jones ended at $39,806.77 (-0.49%)

    S&P 500 ended at $5,308.13 (+0.09%)

    Nasdaq Composite ended at $16,794.87 (+0.65%)

    The stock market began the week with mixed performances as the Nasdaq Composite and the S&P 500 climbed higher, while the Dow Jones Industrial Average decreased. The gains reported by the S&P 500 and the Nasdaq were due to the increase witnessed by Nvidia, as many analysts remain positive about the tech company. Investors are closely monitoring Nvidia’s fiscal first-quarter results, scheduled to be released on Wednesday afternoon, to gauge the strength of the AI-led rally. Moreover, the losses reported by the Dow were due to the decrease of JPMorgan, which fell by almost 4% as CEO Jamie Dimon announced that the bank would not repurchase shares at their current levels. Nonetheless, despite the Dow’s decrease, it is still worth noting that the stock market had a strong week prior to these mixed performances, with the S&P 500 and Dow posting consecutive winning streaks and record highs. Furthermore, UBS’ experts believe that the market rally has more room for growth from its all-time highs, citing solid economic and earnings growth, the prospect of lower interest rates, and rising investment in AI as key factors creating a supportive backdrop for equities for the rest of the year.

    CRYPTO MARKET

    Bitcoin rose by 5.89% for the day, with a value of $70,085.22 as of 3:00 PM CST, as stated by Coin Metrics.

  • MAY 20, 2024

    CRYPTO FUNDING BOOM

    Venture capital funding for crypto companies skyrocketed to $2.4 billion in the first quarter of 2024, marking a rebound in investor interest. This surge follows a peak of $11.1 billion in early 2022 and a subsequent decline to $1.7 billion in late 2023. Despite past setbacks such as crypto firm bankruptcies, some analysts remain upbeat about the industry’s potential for growth and innovation. Let’s remember that recent regulatory approvals, notably for exchange-traded funds tied to bitcoin, have restored investor confidence and sparked newfound optimism. As a result, Bitcoin itself has staged a remarkable recovery, hitting a record high of $73,803.25 in March 2024, and although its performance has been somewhat erratic since then, it is still worth noting that the resurgence in crypto investment activity could be hinting at a more promising future for the industry.

    BULLISH PRICE BOOST

    Leading up to NVIDIA’s earnings release on May 22, analysts from Barclays, Baird, and Stifel have raised their price targets for the stock, indicating positive expectations for the company’s upcoming performance. Barclays maintained a Neutral rating but increased its target to $1,100, foreseeing substantial revenue upside in April and July due to favorable market trends. Similarly, Baird upgraded its target to $1,200, emphasizing NVIDIA’s strong position in AI-related demand and projecting significant growth in GPU unit shipments for this year and beyond. Stifel raised its target to $1,085, anticipating another round of strong results driven by ongoing AI infrastructure investments. Analysts are highly optimistic about NVIDIA’s future prospects and the potential for sustained growth, particularly as the company continues innovating in the AI space and expanding its product offerings. Market analysts, such as Morgan Stanley, share this positive sentiment, highlighting investors’ growing enthusiasm for NVIDIA’s forthcoming products and growth trajectory, underpinning the anticipation for another impressive quarter from the tech giant.

    OPTIMISTIC REVERSAL

    Morgan Stanley has shifted their pessimistic stance on U.S. stocks to a more positive outlook. Initially predicting a significant 15% decline in the benchmark S&P 500 by December, they now anticipate a 2% increase by June 2025. This change in forecast places their target of 5,400 points among the higher projections on Wall Street, indicating a potential record high for the index. The bank is optimistic about the future of U.S. stocks, citing expectations of robust earnings growth and stable economic conditions in the upcoming months. Nonetheless, it is very important to remark that while this shift in sentiment suggests a more favorable market trajectory, there are still bearish views among some analysts at Wall Street. Thus, the bank suggests investors to consider a balanced approach by investing in quality cyclical and growth stocks, while Fed Gov Christopher Walleralso maintaining exposure to defensive sectors such as consumer staples and utilities as a precautionary measure.

    SHINING INCREASE

    Gold prices are on the rise due to several factors, including increased central bank purchases, strong demand from Asian markets – particularly China, and growing geopolitical tensions in regions such as Ukraine and the Middle East. Spot gold saw a 1.2% increase, reaching $2,442.92 per ounce. In addition, silver prices have also climbed, hitting their highest level since December 2012. The recent surge in silver prices was supported by positive sentiment across the physical metals markets, as supply constraints have fuelled investor interest in materials like copper. Meanwhile, platinum and palladium prices remained relatively stable during this period.

    KEY EVENTS HAPPENING THIS WEEK

    Monday: Speeches from Fed Gov Christopher Waller and Fed Vice Chair Philip Jefferson, and earnings reports from Palo Alto Networks and Zoom Video (after market closes).

    Tuesday: Speeches from Fed Gov. Christopher Waller, New York Fed President John Williams, Fed Vice Chair for Supervision Michael Barr, Cleveland Fed President Loretta Mester, Atlanta Fed President Raphael Bostic and Boston Fed President Susan Collins, and earnings reports from Lowe’s and Macy’s (before market opens).

    Wednesday: Existing home sales report for April, minutes of Fed’s May FOMC meeting, and earnings reports from Target, TJX Companies (befor market opens), Nvidia and Snowflake (after market closes).

    Thursday: New home sales report for April, initial jobless claims for week ending on May 18, S&P flash U.S. services and manufacturing PMI reports for May, speech from Atlanta Fed President Raphael Bostic, and earnings reports from Workday (after market closes).

    Friday: Durable-goods orders and dlurable-goods minus transportation reports for April, final consumer sentiment report for May, speech from Fed Gov Christopher Waller.

  • MARKET RECAP – MAY 17, 2024

    STOCK MARKET

    Dow Jones ended at $40,003.59 (+0.34%)

    S&P 500 ended at $5,303.27 (+0.12%)

    Nasdaq Composite ended at $16,685.97 (-0.07%)

    The stock market ended the week with mixed performances as the Dow Jones Industrial Average reached a historic high above 40,000, continuing its strong performance while the S&P 500 saw a modest gain, and the Nasdaq Composite decreased slightly. This discrepancy in performance among major indexes likely contributed to the overall mixed results. Despite some stocks performing well, concerns over the durability of the current rally were voiced by investors. However, the combination of economic growth and decelerating inflation was seen as a positive catalyst for the market by senior investment strategist Tom Hainlin. Overall, the mixed performance of the stock market at the end of the week was influenced by individual stock movements, differing performances among major indexes, and investor sentiment regarding the sustainability of the current market rally.


    CRYPTO MARKET

    Bitcoin rose by 2.55% for the day, with a value of $66,953.87 as of 3:00 PM CST, as stated by Coin Metrics.

  • MAY 17, 2024

    ETH DECLINE AGAINST BTC

    The price ratio between Ether (ETH) and Bitcoin (BTC) has been steadily declining, with ETH/BTC hitting a three-year low, and this downward trend has been mainly been driven by a decrease in demand for ether exchange-traded products and ongoing uncertainty surrounding Ethereum’s position in the cryptocurrency market. In addition, the recent approval of bitcoin ETFs in the U.S. has bolstered bitcoin’s reputation as a store of value, while emerging layer-1 competitors like Solana have captured a larger market share, further diminishing Ethereum’s dominance. Moreover, negative sentiment towards Ether, stemming from both within the crypto community and external sources, is also contributing to its decline. Additionally, Ether has recently transitioned from a deflationary to an inflationary supply model, marking a significant shift in its economic fundamentals. Overall, these factors converge to create a challenging environment for Ethereum’s native token, which might cause concerns among investors and analysts about its future trajectory.

    SHINING BRIGHT

    Silver has emerged as the star performer in the precious metals market this year, overshadowing even gold’s remarkable rally. The white metal has surged by nearly a quarter in 2024, surpassing gold and positioning itself as one of the best-performing commodities of the year. Despite this surge, silver remains relatively affordable, with an 80-to-1 ratio compared to gold, higher than the 20-year average of 68. Thus, while gold has hit record highs driven by central bank purchases and retail interest in China, silver has also experienced a boost. Moreover, despite limited interest in silver-backed exchange-traded funds, physical sales, especially at outlets like Singapore-based dealer Silver Bullion Pte, have been on the rise. The shift in focus towards silver is evident as even traditional gold buyers are considering investing in silver first, waiting for the price ratio between the two metals to rebalance. Silver’s price trajectory is heading towards the $30 mark, a level it briefly surpassed in 2021, and may reach its highest point in over a decade if it breaks $30.1003. Silver’s dual value as a financial asset and an essential component in industrial applications, particularly in clean energy technologies, has been a driving force behind its surge, and with strong growth in the solar energy sector, demand for silver is projected to hit record levels in the coming year. The market for silver is currently in a deficit for the fourth consecutive year, with industrial users seeking to secure supplies from dwindling global inventories. Looking ahead, the supply of silver may tighten further due to increasing industrial demand, potentially leading to supply constraints, and as a result, investors are beginning to show interest in silver.

    DEBT SOARING

    Keeping up with credit card debt is becoming more challenging for many Americans, as according to the Federal Reserve Bank of New York, the total credit card debt in the U.S. has reached $1.12 trillion, with the average consumer owing $6,218. This represents an 8.5% increase from the previous year. Rising prices and interest rates have squeezed household budgets, particularly affecting young adults who are juggling growing expenses like rent, student loans, and auto payments. As a result, delinquency rates on credit cards have risen, with serious delinquencies reaching levels not seen since 2010. Experts warn that credit cards, with an average interest rate of 20.66%, can be a costly form of borrowing. To avoid falling further into debt, it is recommended to pay more than the minimum amount due, consider transferring balances to interest-free cards, or explore additional income sources to accelerate debt repayment and avoid accumulating excessive interest charges.

    LOOSING RELEVANSE

    The failure of Silicon Valley Bank in 2023 was a pivotal event that revealed the financial vulnerabilities stemming from increasing interest rates, and experts have highlighted the potential for a significant decline in bank asset values, suggesting a shift towards banks playing a lesser role in the financial system. Post-pandemic, banks face new risks, including those related to commercial real estate loans, particularly affecting midsize banks with substantial exposures, and as tighter regulations loom, there may be a trend towards industry consolidation and a rise in nonbank lending options. Thus, although the banking sector is generally stable, there are concerns about hidden solvency issues similar to those that led to SVB’s collapse. Furthermore, regulators are actively monitoring the situation to prevent further crises, but it is worth noting that some experts predict a future scenario where smaller and midsize banks face contraction, leading to a potential market shift towards debt securities and private credit as alternative sources of lending.

    INTERNATIONAL NEWS

    In a move to support the struggling Chinese property market, President Xi Jinping’s government has introduced new measures aimed at boosting sales and easing concerns about economic growth. These efforts include relaxing mortgage rules, encouraging local governments to purchase unsold homes, and providing central bank funding for the conversion of excess properties into affordable housing. However, while these steps have initially caused a surge in developer shares, doubts remain about the effectiveness of the plan in addressing the housing crisis. Therefore, although there was a positive market response, analysts question whether the funding provided will be sufficient to address the imbalance in supply and demand. Moreover, as China works to bolster its economy amidst various challenges, including trade tensions and soaring youth unemployment, the success of these latest measures will depend on a careful balance of financial support and policy adjustments.

  • MARKET RECAP – MAY 16, 2024

    STOCK MARKET

    Dow Jones ended at $39,869.38 (-0.10%)

    S&P 500 ended at $5,297.10 (-0.21%)

    Nasdaq Composite ended at $16,698.32 (-0.26%)

    The stock market witnessed losses across all major indexes as the Dow Jones Industrial Average closed slightly lower after briefly exceeding 40,000 for the first time, driven by concerns about high interest rates following a pullback in April. However, strong earnings and favorable inflation readings had fueled a rally in May. Moreover, the S&P 500 and the Nasdaq Composite also were on the downward trend with small decreases. Moreover, it is important to note that despite the losses, the Dow has registered a 6% increase in 2024, and the Nasdaq and S&P 500 are up 11% each. Furthermore, expectations of interest rate cuts and enthusiasm around artificial intelligence have boosted investor sentiment, with the first Federal Reserve rate cut priced in for September. In addition, tech-related stocks like Amazon, Meta Platforms, and Nvidia have also performed well year to date, with Amazon up more than 22% since joining the Dow in the first quarter, and analysts believe the market rally has the potential to continue, showing signs of a cyclical bull market with sustained strength.


    CRYPTO MARKET

    Bitcoin fell by 1.38% for the day, with a value of $65,139.97 as of 3:00 PM CST, as stated by Coin Metrics.

  • MAY 16, 2024

    WAVERING ETHER

    Following yesterday’s announcement that the amount of things people bought in stores did not increase like experts thought it would, the cryptocurrency market reacted positively as the value of all cryptocurrencies rose by 5.5%. Notably, Bitcoin rose by over 7% in just 24 hours, surpassing the $66,000 mark. Nonetheless, despite the positive sentiment in the overall crypto market, Ethereum’s gains lagged behind, only increasing by 5% and struggling to break the $3,000 resistance level. The pending decision by the U.S. Securities and Exchange Commission (SEC) on May 23 regarding VanEck’s spot Ethereum ETF application significantly influenced Ethereum’s performance, with market participants adopting a wait-and-see approach before committing to new investments. And this regulatory uncertainty has spread into the Ether derivatives markets, with indicators revealing a neutral sentiment among traders and hesitancy towards the potential approval of a spot Ethereum ETF.

    TRADER-LIKE SHIFT

    Traditional bond investors are finding themselves in a new world of volatility as government bonds, which were once safe and steady, are now unpredictable, with hedge funds taking advantage of the market swings. This shift has forced long-term investors to adapt to a faster-paced trading environment or risk falling behind. Recent economic data, like rising producer prices and cooling consumer inflation, have kept the bond market on its toes, with expectations of Federal Reserve rate cuts adding to the uncertainty, and as a result of this, bond investors are now operating more like traders, adjusting their strategies more frequently due to the market’s ups and downs. It is worth noting that bond volatility has surpassed that of other assets, which leads to increased risks for holding positions overnight. Thus, these changes have required fixed-income investors to adjust their approach and embrace a more dynamic, trader-like mindset.

    UNEXPECTED RISE

    According to the latest announcement from the U.S. Labor Department, last week saw a higher-than-expected number of Americans filing for initial unemployment benefits, reaching 222,000. Although this was a decrease from the prior week’s total of 232,000, economists had anticipated a lower figure of 219,000. Furthermore, the four-week moving average, which serves to smooth out volatility in the weekly data, increased by 2,500 to 217,750. Additionally, recent data has shown the U.S. economy adding the fewest jobs in six months, along with annual wage growth dropping below 4% for the first time in almost three years. Let’s remember that these statistics are being closely watched by the Federal Reserve as they evaluate the strength of the job market, and any indications of a softening labor demand could relieve upward pressure on wages and inflation, possibly supporting a case for the Fed to lower interest rates from their two-decade highs.

    UNCERTAINTY DESPITE SLOWDOWN

    Despite the recent inflation reading, which revealed a slowdown in price growth excluding food and energy, comments from Federal Reserve officials, such as Neel Kashkari from the Minneapolis Fed, continue to suggest that maintaining current interest rates for an extended period is could still be possible, as there  are other factors that should be considered. For instance, Kashkari has emphasized the need to understand how much the current monetary policy is affecting the U.S. economy, stating that the uncertainty calls for caution before making any changes. In addition, Kashkari, who is closely monitoring the housing market and its impact on inflation, has noted the unexpected resilience of the economy despite high policy rates, suggesting that current interest rates may only be slightly slowing economic activity rather than significantly hindering it. Nonetheless, despite this cautionary stance, it is worth remarking that following the latest CPI report, investors are anticipating about two rate cuts happening this year.

    THRIVING PERFORMANCE

    Walmart’s recent financial performance has surpassed expectations, with the retail giant reporting strong earnings and revenue growth driven by a variety of factors. Notably, Walmart has seen significant gains in its e-commerce business and has successfully tapped into newer revenue streams such as advertising. The company’s ability to attract more high-income shoppers has also contributed to its success, as reflected in its improved earnings per share and revenue figures for the quarter. Walmart’s grocery business, in particular, has experienced a boost due to the growing price disparity between cooking at home and eating out, along with the convenience it offers to customers. Additionally, the company has observed increased customer frequency, especially among newer shoppers, across its virtual and physical stores. Moreover, although Walmart has been facing the impact of inflation, it has managed to adapt by prioritizing essential items to cater to consumer preferences.

  • MARKET RECAP – MAY 15, 2024

    STOCK MARKET

    Dow Jones ended at $39,908.00 (+0.88%)

    S&P 500 ended at $5,308.15 (+1.17%)

    Nasdaq Composite ended at $16,742.39 (+1.40%)

    The stock market witnessed significant gains across all major indexes due to a lighter-than-expected U.S. consumer inflation report. This news increased expectations for Federal Reserve rate cuts in the near future, leading to a positive response from investors. As a result, the Dow Jones Industrial Average, the S&P 500 and the Nasdaq Composite all reached increased, with the last two indexes recording highs as tech companies like Nvidia benefited from the news, with their stocks rising. Overall, despite some setbacks, the market has been performing well this year, and due to the enthusiasm around artificial intelligence and lower Fed rates the current sentiment among investor is positive.

    CRYPTO MARKET

    Bitcoin rose by 7.41% for the day, with a value of $66,109.84 as of 3:00 PM CST, as stated by Coin Metrics.

  • MAY 15, 2024

    SLIGHT EASING

    Although inflation is still above levels that would prompt immediate interest rate cuts, the latest consumer price index (CPI) report has revealed that inflation showed a slight easing in April, offering some relief to consumers. The CPI, which measures the cost of goods and services, rose by 0.3% from March, slightly below expectations. On an annual basis, the CPI increased by 3.4%, in line with forecasts. The core inflation reading, which excludes food and energy prices, remained at 0.3% monthly and 3.6% annually as expected. Retail sales stayed flat for the month, indicating consumers may not be keeping up with rising prices. The uptick in inflation was mainly driven by higher costs in shelter and energy. Shelter costs rose by 0.4% monthly and 5.5% annually, while energy prices increased by 1.1% monthly and 2.6% annually. Food prices remained steady, and used and new vehicle prices showed a decrease. Following the release of softer inflation data, U.S. Treasury yields retreated, with the 10-year Treasury yield falling by more than 8 basis points.

    TURNING TIDES

    Last week, Spot Bitcoin ETFs in the United States experienced a turnaround, with net inflows totaling $116.8 million, following a period of consecutive outflows exceeding $1 billion. Fidelity’s FBTC was the top performer, attracting $111.3 million in net inflows, followed by Ark Invest’s ARKB with $82.8 million. Let’s remember that BlackRock’s IBIT saw its first net daily outflows on May 1, however, despite this, the ETF still managed to secure $48.1 million in net inflows, ranking third. Furthermore, while Grayscale’s Bitcoin Trust experienced net outflows of $171.1 million, it witnessed a reversal with $63 million in net inflows on May 3. Thus, although the overall flow of funds into U.S. spot Bitcoin ETFs has decreased since its peak in March, with trading volume declining to $7.4 billion last week, cumulative trading volume for U.S. spot Bitcoin ETFs has surpassed $250 billion since their launch in January, reaching a total of $254 billion last week.

    DEFICIT URGENCY

    JPMorgan Chase CEO Jamie Dimon is calling for urgent action to address the U.S.’ escalating fiscal deficit, as with substantial spending during and post-pandemic and a current deficit of 6%, Dimon cautions that overlooking this issue could lead to future challenges. It is worth noting that although there have been efforts to reduce the deficit, the government has spent $855 billion more than it collected in 2024 and $1.7 trillion in 2023, and this is why Dimon stresses the necessity of immediate intervention to prevent potential economic repercussions. Dimon underscores the significance of striking a balance between addressing the deficit and fostering economic growth while advocating for bipartisan collaboration. Furthermore, Dimon has emphasized the importance of respectful communication and effective policies to benefit both the nation and the global economy.

    STAGNANT DEMAND

    Mortgage rates recently dropped to their lowest level since April, providing a potential boost for homebuyers looking to enter the housing market. Nonetheless, despite this decrease, many buyers are still finding it challenging to afford properties in today’s competitive market. Thus, as a result of this financial struggle, demand for mortgages has remained relatively flat. Refinancing applications saw a slight increase of 5% while applications for purchasing a home experienced a decrease of 2%. Notably, FHA applications saw a significant decline of 9%, suggesting that first-time or lower-income buyers are especially feeling the financial strain. Moreover, although the lower rates have benefited prospective homebuyers, mortgage rates are still higher compared to the previous year, and to make the environment for potential buyers more challenging, the limited availability of homes for sale continues.

    FADING FRENZY

    Shares of GameStop and AMC have dropped, signaling a decline in the meme stock trading frenzy. The brick-and-mortar video game retailer fell by 13%, while the movie theatre chain dropped by 12%. This came after both stocks saw significant increases earlier in the week. AMC announced a debt-for-equity swap involving 23.3 million shares for $163.9 million of bonds due in 2026, alongside a $250 million stock sale. Despite experiencing notable rallies and trading surges, retail interest this time is notably lower and short-lived compared to previous instances. The recent social media update by Keith Gill, also known as “Roaring Kitty,” reignited speculation around meme stocks, leading to increased trading activity. However, the enthusiasm seemed to wane by the end of the trading session, with some investors and analysts criticizing the meme stock phenomenon as risky gambling.

  • MARKET RECAP – MAY 14, 2024

    STOCK MARKET

    Dow Jones ended at $39,558.11 (+0.32%)

    S&P 500 ended at $5,246.68 (+0.48%)

    Nasdaq Composite ended at $16,511.18 (+0.75%)

    The stock market witnessed better performances today with all major indexes reporting gains. This was primarily due to the release of fresh U.S. economic data, which provided a positive outlook for investors.The producer price index reading for April coming in above estimates initially caused some concern, however, the revision of the March’s wholesale prices helped alleviate worries about stubbornly high inflation. As a result, the Dow Jones Industrial Average, the S&P 500 and the Nasdaq Composite all increased, with the latter rising for a second trading session as GameShop continued its upward momentum.

    CRYPTO MARKET

    Bitcoin fell by 2.38% for the day, with a value of $61,551.24 as of 3:00 PM CST, as stated by Coin Metrics.

  • MAY 14, 2024

    POTENTIAL ROADBLOCK

    In April, wholesale prices surged more than anticipated, posing a potential obstacle to imminent interest rate cuts. The producer price index (PPI), which measures the prices received by producers for their goods, increased by 0.5% for the month, surpassing the Dow Jones estimate of 0.3%. Notably, the revised March figures showed a shift from an initially reported 0.2% gain to a 0.1% decrease, and after excluding the volatile food and energy prices, the core PPI also experienced a 0.5% rise, contrasting with the 0.2% Dow Jones estimate. Furthermore, excluding trade services from this core group revealed a 0.4% increase monthly and a robust 3.1% surge over a 12-month period, the highest level since April 2023. The wholesale inflation was predominantly driven by services prices, which spiked by 0.6%, accounting for a significant portion of the headline gain. Concurrently, the final demand goods index displayed a 0.4% increase. Moreover, the increase in services costs was primarily fueled by a substantial 3.9% rise in portfolio management. On the other hand, goods prices, as indicated by the PPI, escalated by 0.4%, propelled by a 2% surge in the energy index, including a notable 5.4% jump in gasoline prices, while the final demand index for food experienced a 0.7% decline.

    TREASURY YIELDS SOARED

    Following the release of stronger-than-expected wholesale inflation data, the 10-year U.S. Treasury yield ticked up on Tuesday. Initially surpassing 4.5%, the yield settled at 4.487%, while the 2-year Treasury yield slightly decreased to 4.846%. Market attention now turns to the upcoming consumer price index report for April, where economists anticipate a 3.4% year-over-year price increase and a 0.4% monthly rise. Despite concerns from the Federal Reserve about inflation failing to meet the 2% target, interest rate cuts may not be imminent, pending further data. Investor expectations regarding possible rate cuts and their timing this year are contingent on the data. Additionally, more insights into the monetary policy outlook are expected as additional Fed officials, including Chair Jerome Powell, are set to speak this week, offering potential clarity on the Fed’s stance on inflation and interest rates.

    BOOST IN CONFIDENCE

    The National Federation of Independent Business (NFIB) has reported that in April small-business confidence in the U.S. increased, as there was a rebound of the small business optimism index to 89.7 after a dip to the lowest level in nearly a decade in March. This slight upturn was accompanied by a decrease in the proportion of owners planning to raise prices, with only 26% indicating such intentions, the lowest percentage seen in a year. However, it is important to note that high labor shortages continue to exert cost pressures on small business owners, with 40% reporting job openings they could not fill in April. In addition, despite optimism surrounding slower price increases, concerns about inflation linger, with 22% of owners identifying it as their top operational challenge. Nevertheless, economists are hopeful that a cooling labor market might help alleviate some of these challenges, and although there is still uncertainty about rate cuts, there is still a lingering hope that the Federal Reserve may intervene to support businesses.

    RETAIL TRADERS RETREAT

    The army of retail traders who were once at the forefront of driving Bitcoin’s biggest rallies have noticeably reduced their activity as in the first quarter of this year, U.S. crypto exchange Coinbase reported a decrease in consumer trading volumes compared to previous highs, and while there has been a modest recovery in retail interest, it still falls short of the levels seen during the exuberant 2021 rally. It is worth highlighting that the recent surge in Bitcoin prices was primarily fueled by institutional investors, particularly with the introduction of U.S. bitcoin exchange-traded funds. Nonetheless, despite this, retail investors remain cautious due to past challenges, including the prolonged crypto winter and the collapse of prominent companies in the industry. Moreover, as Bitcoin experiences fluctuations and alternative cryptocurrencies gain traction, market observers wait to see if speculative traders will re-enter the scene. The hope is that hitting a price milestone, like $100,000, may reignite retail interest in the cryptocurrency market.

    SALES SLUMPED

    Home Depot’s recent earnings report revealed a decrease in sales as consumers are scaling back on DIY projects. The company’s revenue fell by 2.3% compared to the previous year, with adjusted earnings per share exceeding expectations. Factors such as a late start to spring and softness in larger projects contributed to this decline. In addition, consumer demand within the home improvement retail sector remains challenging due to inflation, interest rates, and a slow housing market. Nevertheless, despite these challenges, Home Depot plans to acquire a roofing and building supply distributor, aiming to expand its market reach. Moreover, professionals like contractors are boosting the business, and the company remains optimistic about its future growth prospects, as CEO Ted Decker expressed confidence in their inventory position for 2024. Thus, although Depot is facing tough comparisons from previous years, it is still positioning itself for continued growth in the complex pro market.

  • MARKET RECAP – MAY 13, 2024

    STOCK MARKET

    Dow Jones ended at $39,431.51 (-0.21%)

    S&P 500 ended at $5,221.43 (-0.02%)

    Nasdaq Composite ended at $16,388.24 (+0.29%)

    The stock market began the week with mixed performances as traders grappled with rising inflation expectations.  As a result, the Dow Jones Industrial Average slipped for the first losing day in nine, while the S&P 500 hovered near the flatline. Consumers’ expectations for inflation rose, with the consumer price index report and producer price index report due later in the week. Nonetheless, despite this the Nasdaq Composite managed to increase slightly as GameStop’s shares soar after the Reddit trader behind 2021’s short squeeze posted online for the first time in three years. Moreover, despite the losses reported by the Dow and the S&P 500, it is worth remarking that the all major averages are within reach of their record levels set in March.

    CRYPTO MARKET

    Bitcoin rose by 2.68% for the day, with a value of $62,997.17 as of 3:00 PM CST, as stated by Coin Metrics.

  • MAY 13, 2024

    DECLINE IN ACTIVITY

    The Runes protocol, which allows for the creation of tokens on the Bitcoin blockchain, has seen a drop in activity since its launch. On May 10th, there was a noticeable decrease in new tokens and wallets interacting with the protocol, and data shows that the protocol’s fee revenue has been consistently falling. Despite still making hundreds of thousands of dollars in fees daily, total fees have only exceeded $1 million twice in the last twelve days. The protocol launched three weeks ago on April 19, coinciding with a Bitcoin halving event. This led to excitement among investors and a surge in transaction fees for Bitcoin miners. Initially dominating Bitcoin transactions, Runes activity has dwindled since April 24. However, there have been signs of recovery starting from May 3, and while the rise in fees initially helped miners after the halving, their total revenue has since dropped to under $30 million per day in May.

    RATE CUTS DEBATE

    Federal Reserve officials, including Chair Jay Powell, have been reinforcing their commitment to keeping interest rates higher for an extended period if inflation remains above their goal. However, it is worth noting that there are differing opinions among Fed officials regarding the timing of potential rate cuts, New York Fed president John Williams expressed confidence in the current policy stance as the upcoming Consumer Price Index (CPI) data for April is expected to show improvement, and this can influence the timing of the rate cuts happening. Moreover, Fed officials like Esther George, believe that a rate cut could come as early as September, others, such as Michelle Bowman and Neel Kashkari, are more cautious about potential cuts this year due to inflation trends. Furthermore, the announcement of the CPI report will also have an impact on determining markets movements, such as the bond market, which has been very volatile as traders have been uncertain about the direction of interest rates.

    TURNAROUND TALE

    During the fiscal year that ended in March, SoftBank reported a 724.3 billion Japanese yen ($4.6 billion) gain on its Vision Fund, marking the first time the tech investment arm had been profitable since 2021. The Vision Fund segment achieved a profit of 128.2 billion yen for the full fiscal year, a significant turnaround from the 4.3 trillion yen loss the previous year. The boost in the Vision Fund’s performance contributed to SoftBank Group’s overall profit in the fiscal fourth quarter. Notably, gains from high-profile investments like ByteDance and DoorDash helped offset losses from investments in companies like DiDi and WeWork. Moreover, it is worth remarking that while the tech investment arm posted a loss of 167.3 billion yen, excluding gains from its subsidiaries’ IPO, there are indications, such as the Vision Fund’s recent gains, suggesting that SoftBank is on a path to recovery after facing setbacks from risky investments in tech firms and market volatility.

    INTERNATIONAL NEWS

    China is embarking on a significant effort to boost its economy by issuing a substantial amount of special sovereign bonds valued at $138 billion. This move comes in response to economic challenges, such as a housing crisis and weakening consumer confidence. The issuance of these bonds aims to provide vital fiscal support, particularly for infrastructure spending to achieve the annual economic growth target of around 5%. Through this initiative, China hopes to counter the potential impact of protectionist measures from the U.S. and uncertainties surrounding upcoming reforms. Investors have responded positively to the news, leading to gains in Chinese equities. Moreover, this bond sale is expected to have a positive influence on GDP, which will potentially offset weaknesses in loan demand.

    KEY EVENTS HAPPENING THIS WEEK

    Monday: Speeches from Fed Vice Chair Philip Jefferson and Cleveland Fed President Loretta Mester.

    Tuesday: Producer price index report for April, speeches from Fed Gov Lisa Cook and Fed Chair Jerome Powell, and earnings reports from Home Depot and Alibaba (before market opens).

    Wednesday: Business inventories report for March, consumer price index and U.S. retail sales reports for April, home builder confidence index report and empire state manufacturing survey for May, and speeches from Minneapolis Fed President Neel Kashkari and Fed Gov. Michelle Bowman.

    Thursday: Import price index, building permits and industrial production reports for April, initial jobless claims for week ending on May 11, speeches from New York Fed President Williams, Fed Vice Chair for Supervision Michael Barr, Cleveland Fed President Loretta Mester and Atlanta Fed President Raphael Bostic, and earnings reports from Walmart and Under Armour (before the market opens).

    Friday: U.S. leading economic indicators report for April, and speech from Fed Governor Christopher Waller.

  • MARKET RECAP – MAY 10, 2024

    STOCK MARKET

    Dow Jones ended at $39,512.84 (+0.32%)

    S&P 500 ended at $5,222.68 (+0.16%)

    Nasdaq Composite ended at $16,340.87 (-0.03%)

    The stock market ended the week with mixed performances as the Dow Jones Industrial Average rose, extending its winning streak to eight sessions and posting its best week of 2021. The positive performance of the Dow was driven by strong gains in 3M and positive sentiment among investors. However, the S&P 500 only saw a modest increase, and the Nasdaq Composite actually declined slightly. The market was initially impacted by consumer sentiment data reflecting higher inflation expectations, which temporarily dampened market enthusiasm. Thus, the uncertainty surrounding inflation and concerns about a potential economic slowdown due to weaker consumer spending and hiring data have contributed to the mixed performances in the overall market. Nonetheless, it is important to highlight that although investors are currently cautious about the Federal Reserve’s decision at their next meeting, they are still optimistic, as recent indications suggested that the next move is likely to be a cut rather than a hike.

    CRYPTO MARKET

    Bitcoin fell by 2.78% for the day, with a value of $60,614.73 as of 3:00 PM CST, as stated by Coin Metrics.

  • MAY 10, 2024

    REVENUE MANTAINED

    Grayscale Investments maintained flat revenue in the first quarter by opting to keep fees stable for its Bitcoin exchange-traded fund. The company experienced outflows of $17.4 billion as investors shifted to lower-fee alternatives offered by competitors like BlackRock and Fidelity. Despite this, revenue surpassed expectations due to the rise in Bitcoin and Ether prices. Digital Currency Group, Grayscale’s parent company, also showed an 11% increase in revenue to $229 million, driven primarily by higher asset values. Mining subsidiary Foundry saw a 35% revenue increase, attributed to staking and equipment sales. Moreover, Luno, the crypto exchange subsidiary, reported a 46% sales growth driven by increased trading volumes.

    CUTS STILL POSSIBLE

    Atlanta Federal Reserve President Raphael Bostic suggested in an interview that the U.S. central bank is likely to lower interest rates this year despite uncertainties in timing and extent. He mentioned that businesses in his district foresee slower wage and job growth, with reduced pricing power. Bostic remains optimistic that these factors will lead to progress in lowering inflation and eventual monetary policy adjustments, though it may take some time. He expects a single interest rate cut later this year, and emphasized the need to patiently observe inflation trends and determine the right timing for any rate changes, and he is hopeful that these steps will help reach the Fed’s 2% inflation target. The Federal Reserve’s outlook will be updated in June, with expectations for inflation to return to the target level by late 2025 or early 2026.

    PRECIOUS METALS ROSE

    Gold prices have increased and are set for their strongest week since early April, driven by weak U.S. employment figures that suggest potential interest rate cuts by the Federal Reserve this year. Spot gold gained 1.1% to $2,372.46 per ounce, marking its highest level in over two weeks, while U.S. gold futures surged 1.7% to $2,379.30. Analysts from Commerzbank noted the focus on U.S. consumer prices amid concerns of inadequate progress in controlling inflation, leading to diminished expectations for interest rate hikes. Consequently, investor interest in gold grew. Additionally, reports emerged of Israeli forces targeting Rafah in the Gaza Strip, while indirect negotiations between Israel and Hamas have ceased, with spot silver, platinum, and palladium all posting weekly gains.

    SOARING OIL

    Oil prices are on the rise as demand increases in the U.S. and China, with Brent hovering above $84 a barrel and U.S. crude also edging up. This growth in demand is supported by ongoing conflict in the Middle East. Latest data indicates a surge in U.S. crude inventories due to higher refinery runs, while China’s oil imports in April surpassed last year’s figures, reflecting improved trade activity. Furthermore, China saw growth in both exports and imports in April, bouncing back from a contraction in the previous month. Meanwhile, tensions in Europe escalated with a Ukrainian drone attack setting a Russian oil refinery ablaze in the Kaluga region. In the Middle East, Israeli forces carried out airstrikes on Gaza, adding to the ongoing conflict in the region. The escalating conflicts raise the potential for broader turmoil, especially with Hamas’ main supporter, Iran, a key oil producer, and these geopolitical risks are anticipated to persist through the second quarter of 2024, with prices expected to gradually ease later in the year as global oil demand growth moderates.

    INTERNATIONAL NEWS

    In response to the robust strength of the U.S. dollar, China’s central bank, alongside other central banks, continues to bolster its gold reserves. This strategic move is aimed at offsetting economic uncertainties and mitigating the high costs associated with importing goods due to the dominant position of the dollar. Central banks, particularly those from emerging markets, are progressively diversifying their assets by turning to gold as a hedge against the prevailing economic volatility and the relentless ascent of the U.S. dollar. The growing trend of central banks accumulating gold underscores a broader shift towards using the precious metal as a protective asset in the face of a strong dollar and increasingly uncertain global economic conditions. This strategic shift not only reflects growing concerns about the sustainability of the dollar’s dominance but also highlights a concerted effort by central banks to safeguard their assets amidst heightened economic uncertainties.

  • MARKET RECAP – MAY 9, 2024

    STOCK MARKET

    Dow Jones ended at $39,387.76 (+0.85%)

    S&P 500 ended at $5,214.08 (+0.51%)

    Nasdaq Composite ended at $16,346.27 (+0.27%)

    The stock market witnessed gains across all major indexes due to the positive news on new jobless claims data rekindling hope for Federal Reserve rate cuts later in the year. This news, along with strong demand in a bond auction leading to lower yields, helped drive the market higher. As a result, the Dow Jones Industrial Average, the S&P 500 and the Nasdaq Composite all increased. Additionally, strong performances from companies like Home Depot and Caterpillar, as well as a positive sentiment towards buying risk in the market, contributed to the gains. Moreover, it is worth noting that despite some quarterly earnings reports coming in below expectations, such as those from Warner Bros Discovery, Airbnb and Arm, the overall positive news and market sentiment led to a successful day for the stock market.

    CRYPTO MARKET

    Bitcoin rose by 0.35% for the day, with a value of $62,443.39 as of 3:00 PM CST, as stated by Coin Metrics.

  • MAY 9, 2024

    RALLY FIZZLING OUT

    Bitcoin and other digital assets have declined by $500 billion, raising concerns that the crypto market rebound may be slowing down. Bitcoin has fallen for five consecutive days, the longest losing streak since last October, while the overall crypto market has dropped by 17% to $2.4 trillion from Bitcoin’s record high in mid-March. Factors contributing to the decline include weakening inflows into U.S. Bitcoin exchange-traded funds and the possibility of higher Federal Reserve interest rates. In addition, the recent launch of crypto ETFs in Hong Kong did not improve the situation. As a result, speculators anticipating strong ETF inflows are now leaving the market. Moreover, in the derivatives market, there are indications that investors anticipate less volatility in Bitcoin compared to the period following the introduction of U.S. ETFs, and indexes measuring expected 30-day price swings for Bitcoin and Ether are currently at two-month lows. Nevertheless, despite this, it is worth highlighting that many believe the bull market is not over, and there is still hope for Bitcoin to reach new highs by the end of the year.

    RECORD PROFITS

    Following the release of its latest earnings report, which displayed a strong performance, Robinhood Markets saw a rise in shares. The company exceeded expectations with a 40% revenue increase and earnings of 18 cents per share, compared to a loss last year. Its cryptocurrency revenue tripled, and equities revenue jumped significantly. The record revenue and profit were fueled by small investors returning to its platform to trade cryptocurrencies without fees. Moreover, the approval of the first spot bitcoin ETFs in the U.S. also helped restore confidence in the cryptocurrency industry. Nonetheless, despite these positive results, it is important to highlight that Robinhood is still facing scrutiny from the Securities and Exchange Commission (SEC) over tokens traded on its platform, which may potentially impact its future trading activities.

    DISAPPOINTING FORECASTS

    Airbnb shares slumped by more than 8% as although it exceeded first-quarter expectations, it fell short of more bullish second-quarter projections, causing its stock to face downward pressure. The company attributes the subpar outlook to the first-quarter occurrence of the Easter holiday, currency-exchange disruptions, and an anticipated stagnation in the growth rate of room nights booked. Moreover, the tapering demand for leisure travel in the U.S. has added to investor apprehensions. Analysts believe Airbnb needed to surpass expectations in the number of nights booked to alleviate worries about decelerating growth and the potential risk of failing to meet consensus estimates for accelerated growth in late 2024 and 2025. Currently, Airbnb is trading at $144.49 per share, and its valuation is notably higher compared to that of Booking Holdings, indicating lingering uncertainties about the company’s future performance.

    UNEMPLOYMENT RISED

    Last week, the number of Americans filing for unemployment benefits rose to 231,000, surpassing economist forecasts of 215,000. Additionally, the number of individuals receiving unemployment benefits beyond the initial week increased to 1.785 million, indicating ongoing challenges in hiring and the broader job market. This increase, likely influenced by seasonal factors such as the conclusion of spring breaks, reflects a labor market that is adjusting following a series of interest rate hikes by the Federal Reserve. Let’s remember that the economy added fewer jobs in April, and job openings hit a three-year low in March, signaling a slowdown in the job market. This deceleration has reignited discussions about potential rate cuts from the Fed later this year, however, the Fed still opted to maintain its benchmark interest rate at 5.25%-5.50% last week.  As the economy grapples with these shifts, the labor market remains in a state of flux, with uncertainties about future trends and potential policy responses.

    INTERNATIONAL NEWS

    The Bank of England (BOE) decided to keep interest rates at 5.25% for the sixth time in a row, with expectations for a possible cut in the summer. The decision was not unanimous, with seven members voting to hold rates and two voting for a cut to 5%. Governor Andrew Bailey is optimistic about inflation falling in the coming months, potentially leading to a reduction in borrowing costs. The UK economy is expected to have returned to growth in the first quarter of 2024, following a period of contraction in the previous quarters. Market forecasts vary on the timing of a rate cut, with some speculating it could happen in June or September. The OECD and Deutsche Bank do not anticipate a rate cut before the third quarter, while Capital Economics predicts rates could drop to 4% by year-end. The European Central Bank is likely to cut rates in June, while the Federal Reserve is not expected to make a move until later in the year.

  • MARKET RECAP – MAY 8, 2024

    STOCK MARKET

    Dow Jones ended at $39,056.39 (+0.44%)

    S&P 500 ended at $5,187.67 (+0.00%)

    Nasdaq Composite ended at $16,302.76 (-0.30%)

    The stock market witnessed mixed performances as the Dow Jones Industrial Average climbed while the S&P 500 remained unchanged and the Nasdaq Composite declined. Tech sector weakness, particularly with companies like Uber, Intel, and Tesla, contributed to the mixed performance. Additionally, Federal Reserve commentary regarding interest rates and inflation also impacted investor sentiment. Nonethelese, despite these challenges, market analysts like Ross Mayfield believe that the market is experiencing a healthy correction with strong fundamentals and economic resilience.

    CRYPTO MARKET

    Bitcoin fell by 1.51% for the day, with a value of $62,146.21 as of 3:00 PM CST, as stated by Coin Metrics.

  • MAY 8, 2024

    CONTRASTING TRENDS IN CRYPTOS

    Solana (SOL) has been a standout performer in the cryptocurrency market recently, with a significant 2.28% increase in its value over the past day. Within the Solana ecosystem, tokens like Jupiter’s token (JUP) and Dogwifhat (WIF) have seen impressive gains. JUP has surged by 25% to $1.14, while WIF has soared by over 35% to $3.28 in the last 7 days. This surge in Solana-related tokens comes as new tokens are being deployed on the network using the SPL standard, with a record-breaking 14,648 new tokens introduced in a single day and an ongoing influx of approximately 10,000 tokens daily for the past two weeks. Moreover, in stark contrast, Bitcoin and Ethereum has dipped below the $63,000 and $3,000 marks respectively as of 8:00 AM CST. However, it is worth noting that despite this downward momentum, both Bitcoin and Ethereum have experienced modest increases over the past week, with Bitcoin up by 4.05% and Ethereum by 2.20%.

    SLIGHT DIP BUT STILL CHALLENGING

    Mortgage rates have seen a notable increase since the year’s start, reaching an average of around 4% for a 30-year fixed-rate mortgage, but a recent slight decrease to 3.75% sparked a surge in refinancing applications. This decrease particularly benefited first-time homebuyers utilizing FHA loans. Nevertheless, despite this upturn in refinancing interest, it is important to highlight that the overall demand remains lackluster compared to the previous year, with mortgage applications down 15% year-over-year due to the elevated rates. Thus, homebuying is still challenging, with home prices rising by an average of 10% nationwide while the inventory of available properties continues to be limited. Moreover, the uncertainty surrounding inflation’s effects on future rates is likely shaping borrowers’ decision-making processes against the backdrop of the current state of the housing market.

    CREDIT CARD DEBT BURDEN EASED

    Consumer borrowing in the U.S. experienced a slight 1.5% uptick in March, marking a significant decline from recent months, primarily driven by a moderation in credit card debt. The Federal Reserve reported a $6.27 billion increase in total consumer credit for March, which is notable drop from the previous month’s $14.12 billion surge. Within this, revolving credit, which includes credit card debt, saw a mere $152 million rise, contrasting with a decline observed in 2021, while non-revolving credit, covering school and vehicle loans, saw a $6.1 billion increase. Moreover, throughout the first quarter of 2024, consumer credit expanded at an annualized rate of 3.2%, with revolving credit increasing by 5.7% and non-revolving credit by 2.2%. Furthermore, this data is likely to soothe market anxieties about consumers struggling with rising expenses and interest rates.

    STRONG EARNINGS BOOST STOCK

    Reddit shares have surged 14% following a strong performance in its first earnings report since going public. The company impressed investors with robust revenue growth and improved profitability, leading to a positive outlook for the future. Reddit’s success was attributed to its efforts in expanding its advertising business and securing content licensing deals with AI-focused companies like Google. As a result, with a market valuation of over $9 billion, Reddit’s share price has risen to $56.97. In addition, analysts have praised Reddit’s potential for growth in ad revenue, citing its vast user-generated content and partnership opportunities. Furthermore, it is worth remarking that despite its relatively small valuation compared to competitors, Reddit is still expected to continue its upward trajectory in the market.

    INTERNATIONAL NEWS

    Morgan Stanley is predicting a potential slowdown in the rapid gains seen in China’s stock market, advising investors to focus on individual stocks and specific investment themes to capitalize on improved investor confidence. The bank has highlighted that while the rebound in Chinese equities has sparked optimism that the market has bottomed out, analysts are divided on the sustainability of this growth, citing concerns over weak earnings growth and a cooling real estate sector. The Hang Seng Index in Hong Kong has shown signs of decline following a 10-day winning streak, with overbought signals suggesting a possible correction in the market. Morgan Stanley notes that China’s consumption levels and housing market may experience a prolonged recovery, leading to ongoing deflationary pressure and potential impact on corporate earnings.

  • MARKET RECAP – MAY 7, 2024

    STOCK MARKET

    Dow Jones ended at $38,884.26 (+0.08%)

    S&P 500 ended at $5,187.70 (+0.13%)

    Nasdaq Composite ended at $16,332.56 (-0.10%)

    The stock market witnessed mixed performances as traders continue looking for more clues on when the Federal Reserve may start cutting rates. The Dow Jones Industrial Average and the S&P 500 saw little changes but mantained their upward momentum, while the Nasdaq Composite dropped slightly. Moreover, the market is closely watching the yield on the 10-year Treasury and how quickly it climbs or falls, as this can impact investor sentiment about the economy. Overall, the market is closely following the Fed’s actions and economic indicators to gauge future performance.

    CRYPTO MARKET

    Bitcoin fell by 0.04% for the day, with a value of $63,033.79 as of 3:00 PM CST, as stated by Coin Metrics.

  • MAY 7, 2024

    AI CRYPTO BOOM

    In the past few days, native cryptocurrencies of blockchain projects leveraging artificial intelligence (AI) have been driving the crypto market recovery. RNDR, the utility token of The Render Network, a decentralized GPU-based rendering solutions provider, saw an impressive 40% surge to $10.432 in just seven days, outperforming the top 100 cryptocurrencies by market value. Other AI coins like AGIX, TAO, and FET also experienced gains ranging between 17% and 23%, surpassing the broader market performance. This trend signifies a growing interest in AI-related investments, with NVDA shares also rallying. Nvidia is set to release its first-quarter earnings on May 22, with expectations of a significant 403% year-on-year increase in earnings per share by Zacks Investment Research. The positive sentiment surrounding AI coins is expected to continue as they remain closely tied to developments in the AI sector. Speculation around the launch of OpenAI’s ChatGPT Version 5 and Apple’s upcoming AI-related announcements further bolsters the excitement in the AI market, indicating a potential AI super cycle currently in progress.

    BONDS TO BE TESTED

    The global bond market is currently facing a crucial test as the U.S Treasury prepares to sell $125 billion in bonds. Following Federal Reserve Chair Jerome Powell’s signal of possible interest rate cuts, investors have been showing interest in purchasing bonds. Notably, with U.S. Treasury yields higher than earlier this year, there has been a rise in demand for bonds in recent auctions. This week’s bond sales include $58 billion in three-year Treasuries on Tuesday and $67 billion in 10- and 30-year Treasury securities later in the week. These sales will serve as a litmus test to gauge investor appetite for bonds, particularly amidst recent decreases in yields. Moreover, it is worth noting that the ongoing bond rally will likely be influenced by the upcoming U.S. inflation report, which will be released next week.

    SALES DECREASED

    In April, Tesla sold 62,167 of its China-made electric vehicles, which was an 18% decrease from the previous year. The drop in deliveries for the locally produced Model 3 and Model Y vehicles was also significant, falling by 30.2% compared to March. These figures contrast with the general trend of increasing electric vehicle sales in China, where growth has slowed due to factors like weakening demand and intensified competition. The China Passenger Car Association (CPCA) did not specify the destinations of Tesla’s exports, which include markets in Europe. Moreover, Tesla’s main rival in the Chinese market, BYD, reported a notable increase in sales. Nonetheless, despite this, it is worth remarking that Tesla has been strategically adjusting its pricing and workforce in various markets. Furthermore, following this news, Tesla’s stock prices experienced a decrease of over 1%.

    ABOVE EXPECTATIONS

    Disney’s fiscal second-quarter earnings exceed expectations, with streaming services Disney+ and Hulu turning a profit for the first time. The entertainment streaming revenue rose by 13%, leading to a total of $5.64 billion in revenue. The company reported an increase in Disney+ subscribers and higher average revenue per user. Disney+ core subscribers grew by over 6 million to a total of 117.6 million, while Hulu subscribers increased by 1% to 50.2 million. Key financial highlights include adjusted earnings per share of $1.21, beating the expected $1.10, and revenue of $22.08 billion, slightly below the expected $22.11 billion. Moreover, Disney’s CEO, Bob Iger, expressed satisfaction with the results, noting that the entertainment streaming segment was profitable for the quarter, with expectations to achieve profitability in combined streaming businesses by Q4. The U.S. parks and experiences revenue increased by 7%, reaching $5.96 billion, while international sales soared by 29%. Furthermore, despite reporting a loss in earnings attributable to the company, Disney remains optimistic about its future performance. However, although Disney’ overall performance was positive, shares dropped by more than 8% following the earnings report.

    INTERNATIONAL NEWS

    According to market pricing, the Bank of England is unlikely to implement its first interest-rate cut until late summer. In fact, there is about a 75% likelihood of a 25 basis point rate cut in August, based on money market pricing data from LSEG. Market strategists believe that any validation of this outlook by BOE officials at their upcoming meeting would further bolster the pound’s rally. As investors await for the meeting on Thursday, the sterling pound has experienced a slight dip against the U.S. dollar and euro, nonetheless, it is still worth remarking that the pound has outperformed all other G-10 currencies in 2024, except for the U.S. dollar, thanks to high U.K. interest rates and evidence of solid economic growth. Moreover, as of what is expected to happen in the next meeting, the Monetary Policy Committee is widely expected to mirrow the Federal Reserve and maintain the key rate at 5.25%.

  • MARKET RECAP – MAY 6, 2024

    STOCK MARKET

    Dow Jones ended at $38,852.27 (+0.46%)

    S&P 500 ended at $5,180.74 (+1.03%)

    Nasdaq Composite ended at $16,349.25 (+1.19%)

    The stock market began the week with gains across all major indexes due to traders lifting Federal Reserve rate cut expectations. The market reacted positively to Fed Chair Jerome Powell’s statement ruling out a rate hike as the central bank’s next move. Moreover, an announcement from Hamas accepting a cease-fire proposal with Israel also gave stocks a boost. Consequently, the Dow Jones Industrial Average, the S&P 500 and the Nasdaq Composite all increased, with the last two indexes increasing by over 1% as investors were encouraged by strong earnings reports from companies like Berkshire Hathaway and upgrades from analysts for stocks like Micron.

    CRYPTO MARKET

    Bitcoin fell by 1.12% for the day, with a value of $63,202.89 as of 3:00 PM CST, as stated by Coin Metrics.

  • MAY 6, 2024

    SURPRISING INFLOW SURGE

    Shares of the Grayscale Bitcoin Trust have increased by 5% following its first day of inflows since January. Let’s remember that the trust, which tracks the price of Bitcoin, had been experiencing significant outflows totaling $17.46 billion since its transition to an easily tradable ETF earlier this year, and some of these withdrawals were associated with bankruptcies in the crypto industry. However, there was a switch in momentum last Friday as Grayscale reported inflows of $63 million, with $18.08 billion in assets under management (AUM). Nevertheless, despite the rise experienced by Grayscale, Bitcoin is on a downward momentum as of 8:00 AM CST. Moreover, Grayscale plans to create a lower-fee Bitcoin Mini Trust, and it is awaiting approval from the Securities and Exchange Commission (SEC), but it is still unknown the fees it would involve.

    POSITIVE RESPONSE YET UNCERTAIN

    Bond traders reacted positively to the latest U.S. labor market report, which  showed slower job and wage growth, and  resulted in a surge in U.S. Treasury yields. This news led to increased expectations of potential interest rate cuts by the Federal Reserve. However, it is worth noting that concerns linger about the persistence of inflation, which may limit the central bank’s actions. Thus, the situation in regards of rate cuts happening this year is still uncertain. In addition, due to these inflation and government spending concerns, there is uncertainty about the direction of long-term bond yields, and as a result, the two-year yield saw a significant decline. Moreover, investors are closely monitoring the upcoming $67 billion Treasury auction to gauge investor demand for longer-dated debt, and determine if it is outperformed by shorter-term securities.

    SHIFT TO DEFENSIVE SECTORS

    Uncertainty in key U.S. economic indicators has caused a shift in investor focus towards defensive sectors, such as consumer staples, according to Morgan Stanley strategists. As April inflation data looms, recent employment figures indicating a cooling labor market have raised concerns about the economic landscape, and the potential scenarios of a soft landing or a no landing, where growth remains robust despite high interest rates, add further complexity to the situation. The need for an adaptable investment strategy becomes evident, as market conditions fluctuate and stock leadership rotates amid differing potential outcomes. Thus, investors may consider adding exposure to defensive sectors like utilities and staples as a precaution against further business activity slowdowns. Nonetheless, it is worth noting that despite uncertainties, the S&P 500 has shown optimism due to the latest strong corporate earnings, which have pushed the index above expectations.

    RECORD-BREAKING QUARTER

    Based on its latest earnings Berkshire Hathaway had a great first quarter, with a big increase in operating earnings and a record amount of cash. The company’s operating profit soared by 39%, driven by impressive gains in insurance underwriting and investment income. The insurance sector saw a substantial 185% surge in earnings, with Geico’s profits almost tripling year-over-year. Additionally, Berkshire’s railroad and energy divisions saw strong performances, further contributing to the company’s success. Furthermore, despite net earnings decreasing by 64% to $12.7 billion due to stock market fluctuations, the company’s cash hoard hit an all-time high of nearly $189 billion, showcasing Buffett’s challenge in finding suitable investment opportunities. Moreover, Berkshire has trimmed its Apple stake and increased its stock buybacks.

    KEY EVENTS HAPPENING THIS WEEK

    Monday: Speeches from Richmond Fed President Tom Barkin and New York Fed President William, and earnings reports from Palantir Technologies, Lucid Group, and Rocket Lab (after market closes).

    Tuesday: Consumer credit report from March, speech from Minneapolis Fed President Kashkari, and earnings reports from Walt Disney Co., Spirit AeroSystems, Nikola (before market opens), Reddit, Astera Labs, Lyft, Virgin Galactic, and Rivian Automotive (after market closes).

    Wednesday: Wholesale inventories report for March, speeches from Fed Vice Chair Philip Jefferson, Boston Fed President Susan Collins and Fed Gov. Cook, and earnings reports from Uber Technologies, Shopify (before market opens), Airbnb, Instacart (Maplebear), Bumble, Robinhood, Beyond Meat, TKO Group, and AMC Entertainment (after marketcloses).

    Thursday: Initial jobless claims for week ending on May 4, speech from San Francisco Fed President Mary Daly, and earnings reports from Warner Bros. Discovery, Tapestry, Krispy Kreme, Roblox (before market opens) and Sweetgreen (after market closes).

    Friday: Monthly U.S. federal budget report for April, preliminary consumer sentiment report for May, and speeches from Fed Governor Michelle Bowman, Chicago Fed President Austan Goolsbee, and Fed Vice Chair for Supervision Michael Barr.

  • MARKET RECAP – MAY 3, 2024

    STOCK MARKET

    Dow Jones ended at $38,678.68 (+1.18%)

    S&P 500 ended at $5,127.79 (+1.26%)

    Nasdaq Composite ended at $16,156.33 (1.99%)

    Big news in the stock market today as US stocks soared, mainly thanks to strong earnings from Apple. This upbeat news boosted investor confidence. In other news, the latest job report showed fewer jobs added last month than expected, which has led some to believe that the Federal Reserve might lower interest rates soon. This speculation has grown because a cooling job market can prompt the Fed to make borrowing cheaper to encourage spending and investment. Market watchers now see a good chance that interest rates could be cut by September. This could have broader impacts on the economy, affecting everything from job opportunities to consumer prices.

    CRYPTO MARKET

    Bitcoin rose by 4.78% for the day, with a value of $62,032.67 as of 3:00 PM CST, as stated by Coin Metrics.

  • MAY 3, 2024

    SLOWER THAN EXPEXTED

    In April, the U.S. economy added 175,000 jobs, falling short of the expected 240,000, resulting in a rise in the unemployment rate to 3.9%. Despite the lower job growth, average hourly earnings saw a modest increase. Sectors such as health care, social assistance, transportation, and retail experienced notable job gains, while construction added 9,000 positions. The government sector, however, only saw an increase of 8,000 jobs after months of solid gains. The broader measure of unemployment, which includes discouraged workers and part-time employees seeking full-time opportunities, also edged up to 7.4%, the highest since November 2021. The report also highlighted a stagnant labor force participation rate of 62.7%. These numbers suggest a potential shift in the Federal Reserve’s stance on interest rates, as the data deviates from the robust job growth seen in recent months, influencing the Fed’s decision-making regarding monetary policy adjustments.

    STELLAR QUARTER

    Coinbase (COIN) has reported a stellar first quarter for this year, with a net income of $1.2 billion and earnings per share of $4.40, thanks to favorable crypto market conditions. In addition, it has been reported that for this first quarter, Bitcoin saw a 34% increase, and the CoinDesk 20 Index (CD20) rose by 17%. Consequently, broker JMP reiterated its positive rating and $320 price target, while Canaccord Genuity raised its target to $280 from $240, and KBW increased theirs to $240 from $230, maintaining their market outlook ratings. Additionally, the Coinbase saw revenue growth from USDC stablecoin activities, but it is worth noting that KBW expressed caution about future balance fluctuations as market conditions evolve. Moreover, analysts anticipate continued growth for Coinbase, which will likely be driven by innovations such as Coinbase Prime and international expansion, the potential of Coinbase’s smart wallet and layer-2 blockchain improvements.

    BULLISH GROWTH

    Block recently raised its full-year earnings forecast and announced intentions to increase its Bitcoin holdings, resulting in a 7.9% surge in its stock price. With the cryptocurrency gaining traction and multiple Bitcoin exchange-traded funds receiving approval from the SEC in January, Block is capitalizing on this growing trend. The company’s strong quarter, marked by a 19% increase in total revenue to $5.96 billion, reflects the positive outlook in the payments sector. Likewise, PayPal has also revised its profit forecast, indicating robust consumer spending. Despite Block’s 9.1% decrease in stock value this year, compared to PayPal’s 9% increase, the firm’s adjusted earnings per share of 85 cents in the first quarter surpassed analysts’ expectations of 72 cents per share. This suggests that despite market fluctuations, Block remains competitive and is strategically positioning itself for future growth fueled by the expanding popularity of cryptocurrency and overall consumer spending resilience.

    RECORD EARNINGS

    In the second quarter of this year, Apple has surprised investors by surpassing profit expectations and experiencing a 6% increase in shares, as although there was a decline in iPhone sales revenue in China, which dropped by 8% to $16.37 billion – outperforming analyst forecasts of $15.87 billion, the company still managef to report earnings per share of $1.53 on a revenue of $90.8 billion. In addition, Apple has achieved a record-high services revenue of $23.87 billion, and announced a $110 billion increase in share repurchases and a higher dividend of $0.25 per share. Moreover, Chief Executive Officer Tim Cook addressed concerns about Apple’s performance in China, noting that iPhone revenue in mainland China grew on a reported basis despite adjustments related to Covid supply chain disruptions. Cook emphasized Apple’s long-term optimism about the Chinese market, which still accounts for 18% of the company’s net sales.

    RATES CONTINUE RISING

    Mortgage rates climbed this week, hitting an average of 7.39%, marking an increase compared to the start of the year. The average monthly mortgage payment stands at $2,175, representing 27% of the median family income of $96,300 reported for 2023. The Mortgage Bankers Association noted a 2.3% decrease in loan applications this week, compounded by elevated home prices and limited inventory in several markets, in spite of a slight uptick in supply reported by the National Association of Realtors in March. It is worth noting that as a rate cut may not be imminent until there is more confidence in inflation stabilizing at 2%, there are concerns that mortgage rates may remain high for the foreseeable future.

  • MARKET RECAP – MAY 2, 2024

    STOCK MARKET

    Dow Jones ended at $38,225.66 (+0.85%)

    S&P 500 ended at $5,064.20 (+0.91%)

    Nasdaq Composite ended at $15,840.96 (1.51%)

    The stock market witnessed gains across all major indexes due to investors being optimistic about more corporate earnings reports and looking ahead to a key labor report set to be released later in the week. As a result, the Dow Jones Industrial Average, the S&P 500, and the Nasdaq Composite increased, with the latter reporting gains of over 1%. Additionally, the Federal Reserve’s decision to keep interest rates unchanged and Fed Chair Jerome Powell ruling out an interest rate hike as the next move reassured investors. Megacap technology stocks rose as Treasury yields dipped, and companies like Qualcomm, Carvana, and Moderna reported better-than-expected earnings. The upcoming April nonfarm payrolls report is highly anticipated, with economists expecting job gains and a potential slowdown from the previous month. Overall, investors are optimistic about the economic outlook and are closely monitoring earnings reports and economic data.

    CRYPTO MARKET

    Bitcoin rose by 3.15% for the day, with a value of $59,300.69 as of 3:00 PM CST, as stated by Coin Metrics.