Traders Market Weekly: Avoid Whiplash, Fasten Your Seatbelts

April 26, 2024

FEAR NOT Brave Investors

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Fear and Greed Feed Volatility

The Week That Was – What Lies Ahead?

Contents

Click on the links below to navigate to the relevant section.

Editorial

It’s the last week of April and traders already have whiplash, the life of markets run by NVidia and Tesla stock prices and news and the ilk! It was a busy week with earnings from nearly 40% of the S&P 500 and key economic releases. The Dow Jones Industrial Average rose 0.7%, the S&P 500 gained 2.7%, the Nasdaq Composite settled 4.2%, equal-weighted S&P 500 up 1.6% this week and all 11 S&P 500 sectors finished higher.

Mega cap gains drove gains in the information technology (+5.1%), consumer discretionary (+3.5%), and communication services (+2.7%) sectors. Meta Platforms (META) was an exception from the mega cap space, dropping 7.9% this week after reporting earnings. Microsoft (MSFT), Alphabet (GOOG hit a new all-time high, and Tesla (TSLA) all gained.

  • Semiconductor Index surged 9.9%, recovering from last week’s 9.2% smashing.
  • Nasdaq100 jumped 4.0%, getting back much of last week’s 5.4% loss.
  • Nvidia this week surged 15.1% after dropping 13.6%,
  • Tesla surged 14.4% this week,
  • Goldman Sachs short index jumped 4.3% this week.
  • Bloomberg: “‘AI Craze’ Powers Best Week in 2024 for Stocks.”
  • Bloomberg: “Wall Street Humbled as Fast-Reversing Markets Confound the Pros.”

Earnings were mixed.

  • Tesla 168.29 +26.84 (18.97%)
  • Alphabet/Google 171.95 +16.09(10.32%)
  • Microsoft 406.32 +4.315(1.07%)
  • Intel 31.88 -2.44 (7.11%)
  • Meta 443.29 -45.81 (9.37%)

Global inflation is surprising to the upside. Bond yields have generally surged back to highs since November.

Market participants digested the Advance Q1 GDP report, which showed weaker growth and higher inflation, and the weekly jobless claims report, which showed ongoing strength in the labor market. The March Personal Income and Spending report showed solid spending activity, but stalled progress on inflation.

Global bonds for their bit are fragile:

  • Ten-year Treasury yields added another four bps to 4.66%, trading this week to a six-month high. The two year note yield rose three basis points to 5.00%.
  • German bund yields gained eight bps to 2.58%, rising to highs since November.
  • UK gilt yields jumped nine bps to 4.32% trading to six-month highs,
  • Australian 10-year yields surged 27 bps to 4.52%,
  • New Zealand yields up 19 bps to 4.98%.
  • Japanese JGB yields added four bps to 0.88%.

The Yen Keeps Falling as Expected:

Yen weakness is providing key support to dollar melt-up dynamics with BOJ slow-motion “normalization” in a world of fast-moving dynamics. Bank of Japan left rates unchanged at zero to 0.1% at its Friday policy meeting and maintained its bond-buying program, pushing out the anticipated shift to QT reiterating that conditions would remain easy. The BOJ boosted its forecast of core CPI for the year from 2.4% to 2.8%.

Governor Kazuo Ueda basically ceded the yen fragility issue to the Ministry of Finance (MOF), affirming Friday it wasn’t in the BOJ’s purview. He conveyed little concern for yen weakness, while downplaying its inflationary impact. The market accordingly took the yen out to the woodshed. The Japanese currency smashed 1.7% in Friday trading to 158.33 to the dollar, the low all the way back to May 1990. From 151.76 to 158.33 in 13 sessions.

Market concerns are mounting that currency instability is about to intensify. Oil prices off their highs but stay bid soared as war drums continued to beat with Russia over the Ukraine and Israel and Iran going at it.

Month-to-date currency losses include:

  • Japanese yen’s 4.0%,
  • Philippine peso’s 2.5%,
  • Indonesian rupiah’s 2.2%,
  • South Korean won’s 2.0%,
  • Taiwanese dollar’s 1.8%,
  • Thai baht’s 1.5%.

Bonds have been under intense pressure throughout the region.

  • Indonesian local currency bond yields surged 15 bps this week to 7.14%. Yields have spiked 47 bps this month, and now approach the multi-year high from the October spike (7.26%).
  • Philippine (dollar) bond yields added five bps this week (5.51%), increasing the April yield spike to 57 bps.
  • Yields are 31 bps higher this month in Singapore (3.38%), 27 bps in South Korea (3.67%), 20 bps in Thailand (2.73%), and 15 bps in Malaysia (3.99%).

CME FedWatch Tool shows the probability for rate cuts shrinking

It would be optically more problematic for the FOMC to begin easing close to the election on either side and so either they exploit an opportunity before or at the December meeting or pass on the year entirely is the logical plan..

Ahead we have another FOMC. Key will be the tone coming out of two-day meeting. The have just got the latest U.S. price data of 3.7% Q1 Core PCE, 3.1% Q1 GDP Price Index, 2.8% y-o-y March monthly Core PCE showing inflation’s decline is stalling. Federal Reserve Chair Powell had noted that Fed economists expect 2.8% y/y unchanged from February.

Just after that Fed meeting, we get the US labor market report. The question investors have to ask is what the Fed can do to inflation given most of it is supply driven, do they have the tools for arresting it and how quickly can consumers and businesses recalibrate?

The Fed has been forced to backtrack from its dovish pivot, with the market now pricing only 34 bps of rate reduction this year. No policy changes are expected but balance sheet plans with additional emphasis upon timing the tapering of quantitative tightening in the minutes three weeks hence are on watch.

“The statement itself is likely to be little changed. The description of current conditions could continue to emphasize that inflation has moved lower over the past year but amend it by stating something that acknowledges the resumption of upside risks in 2024. … This meeting is likely to be a set-up for a likely downward revision in the median projection for rate cuts this year at the June meeting relative to the prior dot plot that showed 75bps of cuts in 2024.”

The downside bias in stocks in the previous weeks was partly related to rising interest rates with Fed officials suggesting they are in no hurry to cut rates because recent inflation reports have not given them enough confidence that inflation is on a sustainable path to the 2% target.

Recall the negative bias in stocks followed a hotter than expected March Consumer Price Index (CPI). Total CPI increased 0.4% month-over-month versus an expected 0.3% increase and core-CPI, which excludes food and energy, increased 0.4% month-over-month versus an expected 0.3% increase. The Producer Price Index (PPI) was cooler-than-expected on a month-over-month basis (actual 0.2%; expected 0.3%), but total PPI still accelerated to 2.1% in March from 1.6% in February.

What now for Israel and Iran?

Soaring tensions between Iran & Israel

  • Israeli attack on an Iranian compound in Syria,
  • Iran launched an unprecedented assault against Israel.
  • Israel hit Iran with a missile in the early hours of Friday, in what appears to have been a retaliatory strike after weeks of escalating tensions between the two countries.
  • There is also the possibility of a knock-on effect of Russian aggressive opportunism. We saw that with the attack on Ukraine natural gas storage just days before the Iranian invasion.
  • Israel thwarted the attack with its multilayered air-defense network that includes systems capable of intercepting a variety of threats including long-range missiles, cruise missiles, drones and short-range rockets. Iran had vowed revenge since the April 1 airstrike in Syria, which Tehran accused Israel of being responsible for. Israel has not commented on it.
  • Should Iran escalate and overwhelm Israeli missile defenses and see larges deaths and casualties in cities such as Tel Aviv, which hosts the Kirya, the Israeli military headquarters Netanyahu will be hard pressed to not take much more drastic action in response. It gives Israel a reason to attack Iran’s nuclear program.
  • The region is a powder keg and there exists possibility of a full-scale war between Iran and Israel, and probably drag the United States in. US President Joe Biden reportedly warned Netanyahu that the US will not participate in any attack by Israel on Iran. In a Presidential election year Biden will most likely take the route that gets him the most votes.

Geopolitical Tinderbox

Turkey Geopolitical
Middle East Risk Monitor

What has changed in two years?

We are about two-and-a-half years since bond markets began tightening in anticipation of Federal Reserve rate hikes that began in March 2022 and the economy remains highly resilient. The rise in the two-year and 10-year Treasury yields was based by late 2022 and well ahead of the fed funds target rate that hit last summer. Lags are long and variable, and the US economy is not out of the woods yet particularly given the surge in mortgage rates, the economy has had significant time to adjust to higher market yields and the majority of mortgage holders are in under 3.9%, which presents another issue for Real Estate inventory. Lending conditions have been tightening, but at an ebbing incremental pace Credit spreads remain tight and the S&P500 has only moved slightly off the all-time peak in late March.

The US consumer has delivered but delinquency rates are rising for several credit categories. Looking deeper much of this has been more about normalization toward pre-pandemic patterns compared to when extreme policy supports, and very low rates meant little to no default activity in the pandemic. Scotiabank points out that “We are at a twenty-three year low in the debt-to-disposable income ratio and still toward record low debt service payments to incomes remain supportive of spending and lessen rate sensitivity compared to, say, strained measures into the GFC. The personal saving rate has normalized, but the stock of outstanding cash and checkable deposits on US household balance sheets remains very elevated “

Looking back two years ago from our January 30, 2022, Traders Market Weekly we can see how little has changed and where herd opinion was so wrong.

On Wednesday markets took volatility to another level with the FOMC and Tesla earnings. By his own admission Chair Powell’s toolkit is limited. The Fed is behind the game on inflation, balancing that with supply chain issues starting to ease in the second half of the year and hurting strong economic growth to slow inflation are all real issues.

Tesla made this clear, Tesla’s December quarter revenue of $US17.7 billion beat consensus estimates of $17.1 billion, with earnings per share of $US2.54 about 7.6% above analyst predictions. TSLA gross profit margin on its automotive operations of 30.6% are easily the best in the global car industry and well ahead of the 24.1 per cent margin it started 2021 with. Tesla increased car sales by a head turning 90% and delivered a net profit of $US5.5 billion. However, the stock sold off over 10% the next day. Why? Supply chain concerns. Elon Musk said those supply chain pressures will last well into 2022 and Tesla’s factories will continue to run below capacity, as they’ve done for several quarters. So, in a nutshell this is where the short-term concerns of Elon Musk and Jerome Powell cross over.

The question investors have to ask is what he can do to inflation given most of it is supply driven, which he does have the tools for and how quickly can consumers and businesses alike recalibrate from Supply chain issues? Not to through in the energy crisis engulfing the world and the continuing war drums from Biden with Russia and The Ukraine. Significantly Ukraine’s President Zelensky said that media reports are making the current tension with Russia appear worse than it really is. Wag the dog from Biden crossed your mind? Did we mention Omicron.From our January 30, 2022, Traders Market Weekly

Well, the Fed is still behind the game on inflation and the tide has turned on Tesla and even more so on electric vehicles. This and inflation are not unrelated. Russia did invade Ukraine and that war is ongoing with the US writing billions in aid checks. This is also inflationary.

Where is the Fear?

The Cboe Volatility Index (VIX) traded at its highest level since November holding above its 200-day moving average., before dipping Friday as Mid East tensions appeared to calm. The VIX Index dropped 3.7 points to 15.0.

CDS prices reversed sharply lower.

  • After surging 49 bps in four weeks, high yield CDS sank 22 this week to 347 bps.
  • Bank CDS reversed lower.
  • JPMorgan CDS declined three to 46 bps – following a two-week 10 bps surge.
  • European bank CDS more than reversed two weeks of gains.

“We have a market trying to interpret the Fed who is trying to find out how they can interpret their long-only portfolio at a risk parity where rates cannot rise.”– MoneyNeverSleeps

Our weekly reminder for risk, timely given the V shape to ATH in just a week. The downside is clear with the absence of moral hazard from repeated Federal Reserve market bailouts in an environment of some would say obscene liquidity pumps. Pure greed is the other part, not wanting to miss out on fees. The obvious question is, how deeply ingrained is this attitude through the markets? How do we ween the markets off this continuous dip feed? At this point the Central Banks have kicked that answer down the road.

Our take remains the Fed is not just focused on inflation but risks such as the commercial real estate debacle. the high US dollar and the massive Federal debt refunding cost.

How Extended? The Rally: Since the Fed’s December “dovish pivot” Into March

  • S&P500 jumped 17.2%.
  • The Semiconductor Index surged 25.3%,
  • NYSE Arca Computer Technology Index 19.0%.
  • Nvidia has almost doubled at up 98%, with Meta up 52%, Micron 41%, and Netflix 36%.
  • Investment-grade spreads (to Treasuries) dropped from 1.04 to 0.88 – outside of a couple of months in 2021, the narrowest since March 2007 (20-year avg. 1.49).
  • High yield spreads collapsed from 3.63 to 2.92 – that, excluding the six months beginning in June 2021, are the narrowest since July 2007 (20-yr avg. 4.93).
  • “The tightest spreads on AA bonds since 2005” and “Single B Spread Index Makes New 16 year Low.”
  • Gold prices have rallied $185, or 9.4% to $2,165, trading this week to an all-time high $2,221.

Last quarter continued the short squeeze, followed by asset chasing that began last year as financial conditions loosened further, building on the Fed’s Q4 dovish pivot. The standouts of course were the AI inspired rally led by NVidia and the crypto rip which saw Bitcoin break to new highs. The spectacular risk asset melt-up was ongoing and global, with record highs in the US, Germany, France and Australia indices to name a few.

We need to grasp all the risks to be wary of but not ignore price reaction. We always talk here about expect the unexpected and now that is front and center, gage the market’s reaction, the market is always right and that’s why we focus on the crowd psychology aspect.

Unsuspecting investors in their millions have or will lose meaningful amounts of their savings. They bought into the mania, threw caution to the wind, and will suffer the consequences regardless of the warnings of unsustainability. The reason we started TradersCommunity was for situations like this many moons ago. Beware of those ‘experts’ who never saw the sell off and chided you for believing it now claim to be gurus measuring risk. It’s a bit late when some of these stocks and markets are down 50-90%. Beware of those who claim long term investment when it all goes wrong. Anyhoo..

Our weekly reminder for risk, timely given the V shape to ATH in just a week. The downside is clear with the absence of moral hazard from repeated Federal Reserve market bailouts in an environment of some would say obscene liquidity pumps. Pure greed is the other part, not wanting to miss out. The obvious question is, how deeply ingrained is this attitude through the markets? How do we ween the markets off this continuous dip feed? At this point the Central Banks have kicked that answer down the road.


PART A – Stock Markets

Highlights – USA

  • S&P500 rallied 2.7% (up 6.9% y-t-d),
  • Dow gained 0.7% (up 1.5%).
  • S&P 400 Midcaps recovered 2.1% (up 4.1%),
  • Small cap Russell 2000 rallied 2.8% (down 1.2%).
  • Nasdaq100 jumped 4.0% (up 5.3%).
  • Utilities added 1.2% (up 5.4%).
  • Banks jumped 2.6% (up 6.9%)
  • Broker/Dealers rose 3.5% (up 7.6%).
  • Transports increased 0.6% (down 4.6%).
  • Semiconductors surged 9.9% (up 13.4%).
  • Biotechs recovered 1.5% (down 8.9%).
  • While bullion declined $54, the HUI gold index gained 2.4% (up 10.6%).
Major US Stock Indices

Highlights – Europe Stocks

  • U.K.’s FTSE equities index jumped 3.1% (up 5.3% y-t-d).
  • France’s CAC40 increased 0.8% (up 7.2%).
  • German DAX equities index rallied 2.4% (up 8.4%).
  • Spain’s IBEX 35 equities index surged 4.0% (up 10.4%).
  • Italy’s FTSE MIB index added 1.0% (up 12.8%).

 Highlights – Asia Stocks

  • Japan’s Nikkei Equities Index recovered 2.3% (up 13.4% y-t-d).
  • South Korea’s Kospi index rose 2.5% (unchanged).
  • India’s Sensex equities index increased 0.9% (up 2.1%).
  • China’s Shanghai Exchange Index gained 0.8% (up 3.8%).

 Highlights – Australian Stocks

  • Australia’s ASX All Ordinaries: Friday -1.4% to 7575.9 (+0.1% for the week).
  • NB: Record intraday of 7901.2 points, Record closing high 7896.9
  • Up 4.2% this year, an extension of a 7.8 per cent rally in 2023.
  • Biggest drag on the index was mining heavyweight BHP. It fell 4.6% to $43.15, after making a $60 billion takeover bid for London-listed miner Anglo American. Later, Anglo American rejected the bid and labelled it “opportunistic” in significantly undervaluing the miner.
  • Gold giant Newmont soared 13.9% to $65.70 after its quarterly profit beat expectations on the back of gold prices rallying over 2024.
  • Bond yields surged as investors discounted the chances of rate cuts in 2024. The Australian 10-year bond yield jumped 19 basis points to 4.59 per cent.

 Highlights – Emerging Markets Stocks 

  • Brazil’s Bovespa index increased 1.1% (down 5.7%),
  • Mexico’s Bolsa index jumped 3.5% (up 0.8%).
  • Turkey’s Borsa Istanbul National 100 index rose 2.3% (up 32.7%).
  • Russia’s MICEX equities index slipped 0.6% (up 11.3%).

Biggest SPX Stock Winners and Losers Last Week


Technical Analysis 

Technical Analysis of key markets via KnovaWave

S&P 500

Daily: We saw a violent ABC for the 5 waves up for SPX continue right into bottom of the median line to give us an (a) or C of a 4. with impulse after completing 5. Reversed hard with energy fueled from the power impulse down from near +1/8 ATH. On the way up (just like down) It accelerated after it broke the Tenkan through the rejected Kijun and then the Kijun to close back over the median and 8/8. Bulls this was a (ii) of a 5. Bears this is a a-b of a C off a completive V of degree. We watch if this low was a (iii), (a) or C. Will determine if sharp ABC completed off all time highs around +1/8. We have to respect the number of alternatives of degree of 5. With such trends keep it simple support is Tenkan and Kijun and watch for ABC. No fear is the driving element.

Daily S&P 500 Flat Top Triangle

The break up was from above the 200dma. The balance from sharp reversal after the initial 3 wave down from the SPX wave 5 extension as Covid19 fed impulse accelerated under the Tenkan. From there we had seen the ABC or 1-2-3 spinning around the 61.8% of the move. Support began at the October 2019 lows. A manic wave 5 or 3 of some degree was a resolution for the ages. Note the 100% extension from the emotive element and MM levels when the spit kicks in. A manic wave 5 or 3 of some degree was a resolution for the ages. Note the 100% extension from the emotive element and MM levels when the spit kicks in

Weekly: The weekly shows us the reenergized SPX tripped in 3 to test recent break up at Tenkan from there we had had a powerful rally to ATH. Again notice what happened “Each new high has evolved after testing Tenkan key support which is the next line after Friday’s dump & minor bounce.” We watch for a spit of a spit Extensions are difficult to time, keep it simple.

S&P500 Weekly Outlook

Key for the impulse higher was the spit or retest of MM 8/8 and Tenkan San, which held with the previous highs and Tenkan.  To repeat  “We look for 3 waves down and reactions to keep it simple with the alternatives in the daily.”  Keep an eye on the put/call ratio with recognition to the sheer size of contracts AND keep in mind the stimulus distortion. The spit per channel fractal and Adams rule launched back over the cloud where we were encased AND we are back testing it. Watch if a spit or clear break support as Chikou rebalances

Dow Jones

DJIA Weekly

NASDAQ 100

Nasdaq move to ATH was after it broke and held the weekly Tenkan to see a spit of a spit fail which is completive of 5 of some degree with Chikou rebalancing. From there we sold off right to Tenkan (as did SPX) and bounced hard Support Tenkan to Kijun. Watch Chikou for divergence for continuation or failure. Divergence with Russell also a clue.

NASDAQ Record Highs

Russell 2000

The small cap Russell RUT has been developing a large flag which it did a false break to fuel the selling from there we replicated to the down (Adam’s theory). Unlike SPX and NDX we could not get through Tenkan and Kijun which rejected the bounce. This is the index showing more of the fast money crowd and is trading like it. Closed right at the top of the cloud and at the channel. the flag. Needs to get traction in here for bulls. Support +1/8 through 7/8 (cloud base)

Russell Index Negative Divergence to NASDAQ

US Stocks Watch

Investors (and algos) will focus on the conference calls and outlooks. Last quarter everyone expected the worse, we saw critical updates on production in coronavirus impacted regions and if there is extended halting of operations weighing on multi-nationals. 

Microsoft MSFT

Microsoft Weekly Shape

NVidia $NVDA

Following the announcement of NVDA 4/1 split some levels off the energy break NVidia hadn’t looked back with many gaps below until it hit the 2.618 target of the exhaustion phase. We saw another power move off the $200 retest (old $800) & earnings off $300 which retested. It is a clear leader of SOX SMH look for cues there and ABC failures for changes.

Nvidia NVDA stock chart

Apple $AAPL

Apple gently motored up to new ATH over the massive $160 then $170 thru to $180 gamma level. These levels will be key energy levels. Support from previous highs, resistance now Fibs and Murrey Math levels. Remember the impact $AAPL has, at least short term on all the major indices.

Apple AAPL Stock Chart

Meta $META

Exxon’s Market Value Tops Tesla’s as Oil Rises, EV Sales Slow

  • Tesla’s market value peaked at nearly $1 trillion over Exxon in November 2021
  • Exxon Mobil Corp. surpassed Tesla Inc. in market value for the first time in more than a year
  • Tesla down 41% this year after sales miss analysts’ estimates
  • Path to electrification may be slower than previously thought. Major players like Ford Motor Co. and Hertz Global Holdings Inc. are reassessing their commitments to EVs as they grapple with slow market penetration.
  • Exxon has reversed a decade-long decline in oil production and is capitalizing on rising oil prices
  • Tesla’s shares had fallen to $147.05, a market capitalization of $469 billion.
  • Exxon’s shares has increased to $119.88, a market capitalization of $475 billion.

Tesla $TSLA

Exxon Mobil $XOM

Exxon Stock Chart

Part B: Bond Markets

Highlights – Treasuries

  • U.S. Treasuries finished a week that saw a slide to fresh year-to-date lows with a modest bounce in longer tenors.
  • Release of the Personal Income/Outlays report for March was mostly in line with expectations. The report showed that progress on inflation stalled, but Treasuries were able to defend their gains as the day went on. The final reading of the University of Michigan’s Consumer Sentiment survey for April (actual 77.2; consensus 77.9; prior 77.9) showed a weakening from the preliminary reading.
  • This week’s underperformance in longer tenors alleviated some pressure on the 2s10s spread, expanding it by two basis points to -33 bps.
  • Crude oil gained $1.63, or 2.0% for the week,
  • U.S. Dollar Index at 105.97, this week’s loss 0.1%. Continued weakness in the Japanese yen sent the currency to a level last seen in May 1990.
  • Total money market fund assets increased $9.1bn to $5.977 TN. Money funds were up $769 billion, or 14.8%, y-o-y.
  • Total Commercial Paper slipped $2.3bn to $1.310 TN. CP was up $161bn, or 14.0%, over the past year.
  • 2-yr: UNCH at 5.00% (+3 bps for the week)
  • 3-yr: -1 bp to 4.84% (+3 bps for the week)
  • 5-yr: -3 bps to 4.69% (+3 bps for the week)
  • 10-yr: -4 bps to 4.67% (+5 bps for the week)
  • 30-yr: -4 bps to 4.78% (+7 bps for the week)

“The primary US investment-grade corporate bond market logged its busiest first quarter on record, super-charged by investors clamoring for high yields before the Federal Reserve starts cutting interest rates. Blue-chip firms have capitalized on robust investor demand to borrow a record $529.5 billion this year through Wednesday, far outpacing the previous high of $479 billion in the first three months of 2020… Sales hit a record in January and February and March issuance of $142.2 billion has exceeded expectations.” March 28 – Bloomberg (Caleb Mutua)

All good while markets hold up but take note that the loosest financial conditions in history have supported record corporate debt issuance. While easy credit availability has supported economic activity, funding new investment whilst keeping vulnerable companies afloat. The combination of urban shifts through virus and riots fears fueled a booming MBS market and record low mortgage rates pushing strong housing markets into Bubble risk territory. What we are seeing now is the same risk, on steroids is in the commercial real estate market (CRE).

Fed Total Assets

Highlights – Mortgage Market

  • Freddie Mac 30-year fixed mortgage rates gained seven bps to a five-month high 7.17% (up 83bps y-o-y).
  • Fifteen-year rates rose five bps to a 21-week high 6.44% (up 71bps).
  • Bankrate’s survey of jumbo mortgage borrowing costs had 30-year fixed rates up 15 bps to 7.62% (up 68bps) – the high since November 30th.

Highlights – Federal Reserve

  • Federal Reserve Credit declined $20.2bn last week to $7.368 TN.
  • Fed Credit was down $1.522 TN from the June 22nd, 2022, peak.
  • Over the past 241 weeks, Fed Credit expanded $3.641 TN, or 98%.
  • Fed Credit inflated $4.557 TN, or 162%, over the past 598 weeks.
  • Fed holdings for foreign owners of Treasury, Agency Debt dropped $14.4bn last week to $3.355 TN.
  • “Custody holdings” were down $15.8 billion y-o-y, or 0.5%.

We do know we have massive speculation pockets, viz a viz the Semi stocks and cryptocurrency mania in just the matter of weeks. The Fed is effectively throwing additional fuel on historic speculative manias. Central banks have been adding liquidity to avoid systematic failure.

Highlights – European Bonds

  • Italian yields slipped a basis point to 3.93% (up 23bps y-t-d).
  • Greek 10-year yields gained three bps to 3.58% (up 53bps).
  • Spain’s 10-year yields rose five bps to 3.36% (up 37bps).
  • German bund yields jumped eight bps to 2.58% (up 55bps).
  • French yields increased five bps to 3.07% (up 51bps).
  • French to German 10-year bond spread narrowed about three to 49 bps.
  • U.K. 10-year gilt yields jumped nine bps to 4.32% (up 79bps).

Highlights – Asian Bonds

  • Japanese 10-year “JGB” yields gained four bps to 0.89% (up 28bps y-t-d).
  • June Japanese government bond (JGB) futures yields traded to 1.12% Thursday, the high back to November. Yields declined slightly Friday on assurances of ongoing BOJ bond support. Risks are mounting. As global yields march higher, liquidity created for JGB purchases is poised to exacerbate yen weakness.

Part C: Commodities

Highlights

  • Bloomberg Commodities Index was little changed (up 4.3% y-t-d).
  • Spot Gold declined 2.3% to $2,338 (up 13.3%).
  • Silver retreated 5.2% to $27.206 (up 14.3%).
  • WTI crude added 54 cents, or 0.6%, to $83.85 (up 17%).
  • Gasoline rallied 1.9% (up 31%),
  • Natural Gas recovered 9.0% to $1.92 (down 24%).
  • Copper gained 1.2% (up 18%).
  • Wheat surged 9.5% (down 4%),
  • Corn gained 1.5% (down 7%).
  • Bitcoin declined $375, or 0.6%, to $63,755 (up 50%).
US Futures Performance W/E 4/26/24

“Commodities will advance this year as central banks in the US and Europe move to reduce interest rates, helping to support industrial and consumer demand, according to Goldman Sachs… Raw materials may return 15% over 2024 as borrowing costs come down, manufacturing recovers, and geopolitical risks persist, analysts including Samantha Dart and Daan Struyven said…. Copper, aluminum, gold and oil products may climb, according to the bank, which also stressed the need for investors to be selective as gains wouldn’t be universal.” March 25 – Bloomberg (Yongchang Chin)

BDI Freight Index

  • Baltic Exchange’s main sea freight index, a measure of global shipping costs, was up for the eighth consecutive session on Friday, rising 1% to an over three-week high of 1,919 points. The benchmark index gained about 11% for the week, notching its best performance in over seven weeks, propelled by all vessel segments.
  • The panamax index, which typically carries 60,000-70,000 tons of coal or grain cargo, advanced for the seventh straight day, up 2.1% to 1,916 points;
  • The supramax index increased 2.1% to 1,394 points.
  • The capesize index, known for transporting 150,000-ton cargoes like iron ore and coal, eased 6 points to 2,839 points.
  • Source: Baltic Exchange
Baltic Dry Index Weekly

Copper

Copper continued its rally after rebounding sharply off the 50wma pulled up by the flattening Tenkan and Kijun to close right at the channel break – a key juncture. HG shrugged off demand concerns from resurgence in Covid-19 supply disruptions. The power spits of +8/8 and +2/8 were rebalanced by the Tenkan breaking the Kijun with 50wma and cloud below. Copper had been a leader in the risk on movement for commodities.

“Copper traded near $10,000 a ton, hitting a new two-year high on its way, as investors continue to pile in on a bet that miners will struggle to service a surge in demand for the bellwether industrial metal. Base metals have posted broad gains in recent weeks, and copper opened Monday with a fresh advance to $9,988 a ton. Signs of improvement in manufacturing activity from the US to China have buoyed metals…” April 22 – Bloomberg:

“Industrial metals including copper and zinc have outperformed global stocks this year as signs of a revival in demand from Chinese manufacturers add to concerns over tighter global supply. An index tracking the performance of six industrial metals on the London Metal Exchange has climbed 8% since the start of 2024… The index, which also includes lead, aluminium, tin and nickel, has risen sharply this month…” April 10 – Financial Times (Stephanie Stacey)

“Copper rallied to the highest in 14 months as investors flock to the bellwether industrial metal in response to rising supply risks and hopes for a global recovery in demand. Prices climbed as much 1.5% on Thursday after dovish comments from Federal Reserve Chair Jerome Powell added impetus to a rally that began in early February on fast-mounting risks to supply. Disruptions at major mines have left smelters paying historically steep prices to get hold of mined ore, and Chinese plants — which produce more than half of the world’s refined copper — are moving closer to implementing a joint output cut in response.” April 4 – Bloomberg (Mark Burton and Annie Lee)

Copper Futures Outlook

Gold

  • “Chinese buyers, spooked by a protracted property slump and a recent stock-market rout, are rushing toward gold as economic uncertainty looms… Gold consumption in China rose 5.94% from a year earlier to 308.91 tons in the first quarter, the state-backed China Gold Association said… Meanwhile, China’s imports of gold raw materials surged 78% in the same period, helping the country’s total gold output to jump 21.16%… In January-March, Chinese buyers’ purchase of gold bars and coins rose 26.77% to 106.32 tons, amounting to around a third of total consumption.” Wall Street Journal:
  • Gold hit an all-time record this week helped by China’s central bank (PBOC) buying for its reserves for a 17th straight month in March. Bullion held by the People’s Bank of China rose to 72.74 million fine troy ounces last month, according to official data released Sunday.
  • Precious metals were the stellar performer in the commodities arena in Q1. Gold surged $167, or 8.1%, to an all-time high $2,230. Silver jumped 4.9% to $24.96.
  • Central bank buying has also been a significant driver of its strength since 2022. Global central banks, led by China and India, continued adding to their gold reserves in February, marking a ninth straight month of growth, according to the World Gold Council.
  • China’s official reserve assets rose to the highest since November 2015. The country’s foreign exchange reserves rose to $3.2457 trillion by the end of March, the highest since December 2021, as the central bank aims to maintain stable holdings to fend off risks. They rose 0.6% from February and were up 1.9% from a year earlier.
Gold Weekly Outlook

Energy

US Crude Oil (WTI)

Daily: WTI Crude Oil has continued to rally since retesting the pennant breakout last December after completing the correction in 3 waves. From there it broke the pennant and retested to continue to retest the breakdown last October to break above those descending levels for higher. We are in a completive mode for bulls with this impulse, it’s a question of degree on the topside, use the Murrey math 240/60 grid. Completing a C or IV? Support is previous lows and the bull flag. The bear case is the high was a complete 5.

WTI Weekly KnovaWave Shape

Weekly: WTI crude oil futures held the support line from July 2021, having plunged around 50% off 2022 highs. It has broken to the topside of its sphere of influence to close out the quarter over Kijun and Tenkan which are now support. WTI completed 3 waves and powered through the tenkan and 50wma, h and held the retest. Risk support is the grid. Resistance weekly channel, Murrey Math levels and previous breaks (off monthly). Bear case is Wave 5 complete.

What we broke……. Crude Oil in the past quarter built a huge bull flag. We watch if the recent break was false, or we fail. Very clear pattern.

WTI Daily KnovaWave

The key is crowd behavior to help tell the story which in energy is often around geopolitics. A great example of why we watch ABC corrections and from here we get the energy from the break being balanced. This move that was powered by 50 dma Tenkan spit of a spit – hence the fractal energies reverberations.

US Natural Gas (Henry Hub)

Daily: US Natural Gas futures are a great example of rebalancing mania. The market is still correcting the manic 5 post the Ukraine invasion and beyond. Since the breakdown of the correction channel with failed breakups we have continued to multi year lows in a pennant formation after holding the daily 1/8. We now look at our Adam’s theory fractal rules with fractal spits powering these moves lower. Two clear alternatives, we are correcting the highs 5 or that was a 3 and we go higher. Resistance is heavy: 2/8 and cloud above. Kijun, 50 dma and cloud. Support is previous lows. Important to watch how this energy was built for shape correlation.

US Natural Gas KnovaWave Daily Grid

Like the larger wave on the way up it accelerated through previous highs (flat topped triangle energy) and over the resistance at 8/8 and new highs. We successfully tested that break in a pennant ABC. Previous highs (flat topped triangle energy) and 8/8 and new highs underscore the structure that fed the move and is key longer term in the collapse lower.

Weekly: Natural gas still correcting the past month when blew through all levels of support after breaking the weekly 50wma and the Kijun gave a kiss of death. From there we Broke down out of the corrective channel (Wave 4 or IV) to new multi-year lows. This week we closed right at the weekly Kijun and 1/8. around the 50wma and tenkan in the cloud. The instability stems from the sharp reversals that have failed indicative of speculative fervor like the previous impulsive spikes. Support is the 1/8 Sphere. Bulls need all the damage down to be rebuilt. Kijun is major resistance given energy higher came from a clean break of the Kijun.

US Natural Gas KnovaWave Weekly Grid

Part D: Forex Markets

John Maynard Keynes, 1920: “There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction and does it in a manner which not one man in a million is able to diagnose.”

Highlights

In the first quarter the dollar rode high against almost every major currency. We saw central banks, from Japan, China and India intervene, or consider intervening, to bolster their currencies. The yen in view of USDJPY 152 and the yuan struggling to break back below 7.2 USDCNH officials have stepped up efforts to stem any further depreciation.

In Japan it’s been verbal warnings, in China it has been state banks buying yuan and selling dollars.
Remember these two are major competitors for export dollars. With that there’s a school of thought that Beijing could have grown more tolerant of a weak yuan to maintain its competitive edge against the yen.

Japan’s predicament is a major issue. Yet the sustainability of China’s currency peg might be the elephant in the market. The yen has devalued 11.3% versus the renminbi over the past year, with the Indonesian rupiah down 4.3%, the Thai baht 3.2%, and the Malaysian ringgit 2.2%.

With China’s apartment Bubble deflation gaining further momentum, Beijing faces huge challenges to attain growth mandates. Maintaining competitiveness for China’s massive export sector will be a top priority. Especially with its archrival’s economy and stock market booming, Beijing is resorting to increasingly desperate measures to hold Bubble deflation at bay. According to Bloomberg, “China’s sovereign wealth fund likely bought at least $43 billion of onshore exchange-traded funds in the first quarter” – and this was only a portion of enormous “national team” market support.

Beijing used to claim they had studied and learned from Japan’s Bubble experience. Chinese officials later criticized U.S. and “western” central banks for adopting inflationary QE measures. Well, look who’s now talking central bank bond buying.

April 22 – Bloomberg: “China’s Ministry of Finance said it supports allowing the central bank to buy and sell government bonds, reaffirming a comment by President Xi Jinping that ignited market speculation about a change of monetary strategy. The ministry called for stepping up coordination between fiscal and monetary policy and ‘improving the mechanisms of base money injection and money supply adjustment,’ in an article written by a study group and published by the People’s Daily… It was based on a recent book that compiled Xi’s statements about finance and economics. In that text, Xi was quoted as saying that the People’s Bank of China should gradually increase the buying and selling of government bonds in open-market operations.”

As Beijing pushes ever harder to sustain its Bubble Economy and thwart systemic debt crisis, the world is watching. Ongoing massive Credit growth ensures an only greater debacle, while Beijing directives are bringing new meaning to “malinvestment.” Importantly, this is not the good old days when perceptions of a great and infallible Beijing meritocracy had global analysts – and rating agencies – reverent and inhibited. The bloom is off the rose, and skepticism is these days palpable.

April 24 – CNBC (Evelyn Cheng): “China’s state-directed economy may be creating the conditions for a new wave of bond defaults that could come as soon as next year, according to an S&P Global Ratings report… It would be the third round of corporate defaults in about a decade, the ratings agency pointed out. It comes against a backdrop of extremely few defaults in China amid concerns about overall growth in the world’s second-largest economy. ‘The real thing to watch for policymakers is whether the current directives are creating distorted incentives in the economy,’ Charles Chang, greater China country lead at S&P Global Ratings, said…”

  • For the week the U.S. Dollar Index slipped 0.2% to 105.94 (up 4.5% y-t-d).
  • On the upside, the Australian dollar increased 1.8%, the Brazilian real 1.7%, the South African rand 1.6%, the British pound 1.0%, the New Zealand dollar 0.9%, the Canadian dollar 0.6%, the South Korean won 0.5%, and the euro 0.4%.
  • On the downside, the Japanese yen declined 2.3%, the Swiss franc 0.4%, the Mexican peso 0.4%, the Norwegian krone 0.1%, the Singapore dollar 0.1%, and the Swedish krona 0.1%. The Chinese (onshore) renminbi declined 0.1% versus the dollar (down 2.02% y-t-d).

 Australian Dollar – AUDUSD

The Aussie dollar is still correcting since completing a 5 at the pysch 80 level to fall under the weekly cloud in emotive fashion. The Australian dollar fell to test of the August lows of 0.7106 with Omicron fears. Should that double bottom go support ia the Murrey Math Levels. Resistance the Cloud, Tenkan and Kijun like many commodities.

Australian Dollar KnovaWave Weekly Outlook

Japanese Yen – USDJPY

USDJPY broke above after weakness with Treasury yields to rush to +2/8 and channel convergence, we have come a long way from that 108.00 massive support for dollar-yen back to test the top of the flat-topped triangle at 151/152. Any change will come from the weekly Kijun. Use your USDJPY Murrey 7/8 8/8 grid for now. EURJPY AUDJPY will determine risk on/off.

Japanese Yen v Dollar KnovaWave Weekly Outlook

“The United States, Japan and South Korea agreed to ‘consult closely’ on foreign exchange markets in their first trilateral finance dialogue on Wednesday, acknowledging concerns from Tokyo and Seoul over their currencies’ recent sharp declines. The rare warning from the three countries’ finance chiefs came as receding expectations of a near-term U.S. interest rate cut pushed the yen to 34-year lows, keeping markets on alert on the chance of an intervention by Japan to prop up the currency.” April 17 – Reuters (Saqib Iqbal Ahmed)

Chinese Yuan – USDCNH

“Chinese businesses are hoarding dollars because they expect their own currency to weaken, and that in turn is exacerbating a slide in the yuan… This feedback loop has been playing out for months in mainland currency markets, spurred on by the dollar’s rising yield. Foreign exchange deposits have climbed $53.7 billion since September to $832.6 billion… Analysts say one of two things needs to happen to end the downward spiral: the Federal Reserve needs to make deep rate cuts or the yuan needs to hit some form of a trough. Both seem distant.” April 17 – Reuters

China manages its currency onshore by setting a daily reference rate against the dollar at 9:15 a.m. local time, around which it is then permitted to trade in a 2% range. The PBOC has kept the daily rate in such a tight range this year that a gauge of volatility in the fixing has dropped to the lowest since before the shock yuan devaluation of 2015.

Canadian Dollar – USDCAD

The Loonie is holding the Tenkan after a 3 year high in June and corrected that in 3 waves led by the AUD and NZD with oil price impacting direction. Watch flat Kijun and Tenkan at 8/8. Use Fibs for support and resistance.

Canadian Dollar KnovaWave Weekly Outlook

Mexico Peso – USDMXN

“‘Super Peso’ Slides as Middle East Risk Threatens Carry Trade”: “The Mexican peso slumped the most in four years, as increasing conflict in the Middle East sapped demand for the currency that has been one of the favorite targets for carry trades. The peso tumbled more than 6% against the dollar as news began to filter through Friday of an Israel retaliatory strike on Iran, in what some in the market described as a ‘flash crash.’ The currency had climbed to the strongest in almost nine years last month, driven by relatively high local interest rates and low currency volatility.” Bloomberg (Marcus Wong)

USDMXN KnovaWave Weekly Outlook

Euro – EURUSD

Euro continues to bump up against that downtrend line from 2020 and spinning around the 50% of that year’s panic sell. The euro trades in what seems like eternal flags in the channel. We watch if Kijun (pink) testing Tenkan (orange) creates any impulse as EURUSD consolidates at the cloud. Watch 3 waves to see development for continuation. Watch for impulse off Chikou rebalance. Again governed by EURGBP and Bund volatility.  

Euro KnovaWave Weekly Outlook

British Pound – USDGBP

British pound classic retest of daily cloud break with magnet pulls of cloud twist after ABC correction – will need Tenkan to break through Kijun for more strength. The upcoming month will be heavy on UK data and election speculation which could mean an eventful time for the British pound.

British Pound KnovaWave Weekly Outlook

Bitcoin

Crypto Q1 24 Highlights

  • Bitcoin surged 64% during the quarter,
  • Ethereum gained 53%
  • Binance Coin soared 95%.
  • Having started trading on January 11th, the iShares Bitcoin ETF rose 52%.

Bitcoin is performing technically to perfection. Impulse begets impulse. To understand panic, understand greed. Bitcoin exploded higher following its correction impulsively upon completing 5 waves up at +2/8. Each Tenkan and Kijun tap saw an explosive kiss of death until we completed 3 waves to around 28,000. From there we have seen extreme volatility to a new record high and retest.

Bitcoin KnovaWave Weekly Outlook

We have seen what you would expect from a 5-wave impulse peak and ABC correction, a violent correction and completion. Use Murrey Math levels for corrections and targets as algorithms control the herd here, support is the cloud and sharp ABC, 1-2 moves. From there prices agitated towards those ATHs as news of a Bitcoin ETF fueled the rally, sound familiar? But this time it wasn’t signaling we are in a 3 high probability but a 5.

On the Risk Radar

Akio Morita mistakes

 Geopolitical Tinderbox Radar

The Week Ahead – Have a Trading Plan

Watch EarningsCentral Bankers and Geopolitics speeches, reports and rate moves.

  • Employment Cost Index (Tuesday): The Q1 estimate could extend the string of q/q nonannualized SA gains of about 1% or more that has been in place for ten consecutive quarters through 23Q4 (chart 6). Revisions will be offered back to 2019Q1. ADP private payrolls (Wednesday): April’s reading is likely to extend the pattern of reporting softer growth in private payrolls than the private part of nonfarm payrolls. They are not typically well correlated with nonfarm payrolls, but markets often react as they pass the time until the measure the Federal Reserve pays closer attention to.
  • JOLTS (Wednesday): The report includes an array of measures from job openings to quits. Progress toward sustainably lower job openings has been somewhat erratic. The Fed monitors measures like the openings to unemployment ratio as one indication of the balance between supply and demand for labour 7: JOLTS Job Openings as a Ratio of Unemployed Persons
  • Challenger job layoffs (Thursday): April’s readings follow a pick-up in March that signalled greater firings but at a level that is still compatible with a strong job market. Chart 8: US Mass Layoffs Productivity (Thursday): Nonfarm productivity growth is likely to slow following the somewhat softer than expected GDP report and gain in hours worked. A one-handled q/q SAAR gain is likely and would halt the string of strong gains from 3.1% to 4.7% to 3.2% over 2023Q2 to Q4 respectively The Fed likes to see more rapid productivity growth as an indication of less inflationary pressure since it signals doing more with the same or fewer inputs.
  • Labour Costs (Thursday): As a result of weaker productivity growth, productivity-adjusted employment costs probably rose by roughly 2% q/q SAAR in Q1. That would be disappointing from the standpoint of employment market drivers of inflation risk after flat ULCs in Q3 and Q4 (0.1 and 0.4% q/q SAAR respectively) that signaled some optimism following previously strong gains (chart 10).
  • Jobless Claims (Thursday): The recent figures dipped again and are indicating a trend strengthening in the job market.
  • Friday’s nonfarm payrolls report (Friday) Household survey that is unlikely to post the same strength in employment and relative softness in the supply of labor. Wages are expected to post another 0.3% m/m SA gain that at an annualized rate would keep the heat on labor market pressures on inflation.
  • ISM-manufacturing (Wednesday): April’s reading is expected to register little evidence of any growth as it hovers around the 50 dividing line between expansion and contraction.
  • ISM services (Friday): April’s reading is expected to continue to indicate moderate growth in the services sector.
  • Consumer confidence (Tuesday): Considerations like higher gasoline prices and softer equities could dent April’s confidence reading.
  • The US will also update repeat sale house prices for February (Tuesday), construction spending during March and vehicle sales during April (Wednesday), international trade figures that tack on the services side to the already known goods balance (Thursday) and total factory orders that should be strong in the wake of a big gain in total durable goods orders fed by a surge in aircraft orders.

US Economic Highlights

  • Monday: Dallas Fed manufacturing activity, April (-11.3 expected, -14.4 prior)
  • Tuesday: Q1 Employment Cost Index (prior 0.9%) at 8:30 ET; February FHFA Housing Price Index (prior -0.1%) and February S&P Case-Shiller Home Price Index (prior 6.6%) at 9:00 ET; and April Consumer Confidence (prior 104.7) at 10:00 ET
  • Wednesday: Weekly MBA Mortgage Index (prior -2.7%) at 7:00 ET; April ADP Employment Change (prior 184,000) at 8:15 ET; JOLTS job openings, March (8.72 million expected, 8.76million last month); March Construction Spending (prior -0.3%) and April ISM Manufacturing Index (prior 50.3%) at 10:00 ET; weekly crude oil inventories (prior -6.37 mln) at 10:30 ET; and May FOMC Decision (prior 5.25-5.50%) at 14:00 ET
  • Thursday: Challenger jobs cuts, year-over-year, April (+0.7% previously); Weekly Initial Claims (prior 207,000), Continuing Claims (prior 1.781 mln), March Trade Balance (prior -$68.9 bln), preliminary Q1 Productivity (prior 3.2%) and Unit Labor Costs (prior 0.4%) at 8:30 ET; March Factory Orders (prior 1.4%) at 10:00 ET; and weekly natural gas inventories (prior +92 bcf) at 10:30 ET
  • Friday: April Nonfarm Payrolls (prior 303,000), Nonfarm Private Payrolls (prior 232,000), Average Hourly Earnings (prior 0.3%), Unemployment Rate (prior 3.8%), and Average Workweek (prior 34.4) at 8:30 ET; S&P Global US Services PMI, April final (50.9 expected, 50.9 previously); ISM Services PMI, April (52 expected, 51.4 previously) at 10:00 ET

Bond market Highlights

  • Monday: 
  • Tuesday: 
  • Wednesday: 
  • Thursday: 

Central Bank Highlights

A number of central banks with decisions this week, Fed-speak is on blackout until FOMC

  • BanRep Banco Central de la Republica de Colombia is widely expected to cut its overnight lending rate by 50bps on Tuesday. That would extend cumulative easing to date to -150bps as inflation has subsided. Core inflation ebbed again in March to 8.8% y/y from 9.2% which remains high but is expected to continue declining going forward. Forward guidance may have a hint of greater caution given growth and as the Federal Reserve’s cuts get pushed out.
  • Federal Reserve – two-day meeting over Tuesday and Wednesday culminates in a statement and press conference sans any updated projections. It should be a relatively simple affair. “No policy changes are expected but watch for further discussion on balance sheet plans with additional emphasis upon timing the tapering of quantitative tightening in the minutes three weeks hence. Chair Powell’s press conference will continue to emphasize that the Committee does not have the required ‘greater’ confidence that inflation is on the right path following recent trends and therefore is not moving toward nearer term easing. This meeting is likely to be a set-up for a likely downward revision in the median projection for rate cuts this year at the June meeting relative to the prior dot plot that showed 75bps of cuts in 2024.”
  • Norges Norway’s central bank is expected to hold its deposit rate at 4.5% on Friday. A more dovish stance is possible in light of a weak GDP report for February and another softer than expected CPI for March. The last meeting in March had guided that a cut could be delivered by September. Guidance is unlikely to bring that point forward. Markets are pricing only half of a quarter point cut by September. A significant consideration is that Brent crude has risen from about US$75 per barrel in December to just shy of $90 today and this could make the central bank incrementally more hawkish on the implications for inflation and the terms of trade.

US Earnings Highlights

The S&P 500 trades at 20.7 times its estimated earnings for the next 12 months, near a more than two-year high of 21.2 hit in late March, according to LSEG Datastream at a time when elevated yields on Treasuries bolster the attractiveness of bonds.

Analysts expect to see earnings growth of 5% in the first quarter, according to LSEG data. That would be the lowest since the second quarter of 2023. They expect margins to be squeezed by high interest rates, rising commodity costs, and falling corporate pricing power due to slowing inflation. Earnings grew by 10.1% in the fourth quarter of 2023.

A big week for earnings ahead, 166 S&P500 firms release this week including Magnificent Seven tech names Apple and Amazon. Tesla (TSLA), Meta Platforms (META), Alphabet (GOOGL) and Microsoft (MSFT) also part of the group of companies that had been dubbed the Magnificent Seven as they led the S&P 500 to a 24% gain last year reported last week.

157 S&P500 firms will release earnings reports including names like Meta Platforms, Alphabet, Tesla, Ford, UPS, GE, Boeing, Caterpillar, Intel, and Microsoft. The earnings season is mixed so far with just 70 out of 500 firms out, as the earnings beat ratio remains high, but the revenue beat ratio is a coin-toss and other earnings details by sector and company have been highly variable. via ScotiaBank

  • Monday starts us off with Avis Budget Group (CAR), Chegg (CHGG), Domino’s Pizza (DPZ), Logitech (LOGI), Paramount (PARA), Philips (PHG), SoFi Technologies (SOFI)
  • Tuesday includes Amazon (AMZN), AMD (AMD), Caesars Entertainment (CZR), Coca-Cola (KO), Eli Lilly (LLY), McDonald’s (MCD), Oatly (OTLY), Pinterest (PINS), PayPal (PYPL), Riot Platform (RIOT), Super Micro Computer (SMCI), Sirus XM (SIRI), Starbucks (SBUX), 3M (MMM)
  • Wednesday Includes Carvana (CVNA), CVS (CVS), Devon Energy (DVN), Estée Lauder (EL), Etsy (ETSY), Kraft Heinz (KHC), Marriott International (MAR), Mastercard (MA), Norwegian Cruise Line (NCL), Paycom (PAYC), Pfizer (PFE), Qualcomm (QCOM), Wing Stop (WING)
  • Thursday includes Apple (AAPL), Block (SQ), Booking Holdings (BKNG), Coinbase (COIN), Cigna (CI), ConocoPhillips (COP), DraftKings (DKNG), Expedia (EXPE), Moderna (MRNA), Novo Nordisk (NVO), Peloton (PTON), Wayfair (W)
  • Friday includes fuboTV (FUBO), Hershey (HSY)

World events

Atlassian (TEAM) co-CEOs Mike Cannon-Brookes and Scott Farquhar will be speakers at the company’s Team24 conference. Riot Platforms (RIOT) will participate in the AIM Summit in London. Atlassian (TEAM) will host its Investor Day with financial analysts and investors. MongoDB (MDB) will host an investor session at MongoDB. local in New York City. Hyatt Hotels (H) will hold a conference call to discuss the company’s segment realignment. Sagimet Biosciences (SGMT) will host a virtual investor and analyst day.

Monday

  • Israel: Last Day of Passover (Pesach) public holiday. Financial markets closed
  • Japan: Shōwa Day. Financial markets closed, Golden Week begins
  • Togo: parliamentary and regional elections
  • Spain: Prime Minister Pedro Sánchez due to announce whether he will resign from office following an accusation against his wife, Begoña Gómez, of an alleged case of corruption. Last week he said he was considering quitting
  • UK: former Scottish first minister Nicola Sturgeon appears before Westminster’s Scottish Affairs Committee to answer questions on intergovernmental relations
  • The IMF’s executive board meets to discuss the approval of $1.1bn funding for Pakistan, the last tranche of a $3bn standby arrangement secured last summer to avert a sovereign default and which runs out this month

Tuesday

  • Singapore: IMF Regional Economic Outlook for Asia and Pacific
  • UK: quarterly government debt and deficit estimate. Physical border inspections due to begin for certain goods entering Great Britain from the EU. Small and medium-sized enterprises are expected to face charges running into tens of thousands of pounds

Wednesday

  • China, France, Germany and South Korea, among other countries: Labour day. Financial markets closed
  • EU: 20th anniversary of the trade bloc enlarging to 25 member states from 15 as Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia joined
  • UK: London’s annual May Day rally. Among the speakers, mainly union leaders, will be Palestinian ambassador to the UK Husam Zomlot

Thursday

  • OECD Economic Outlook
  • France: OECD ministerial council meeting in Paris, chaired by Japan.
  • Georgia: the Asian Development Bank’s annual meeting begins in Tbilisi
  • UK: local elections in England and Wales, including for 10 metro mayors. A by-election will also be held for the Westminster seat of Blackpool South. Results will be announced the next day

Friday

  • Japan: Constitution Day. Financial markets closed
  • World Press Freedom Day
  • 800th day of the Russia-Ukraine war.

Saturday

  • Italy: 107th annual Giro d’Italia men’s cycling race launches with stage one, marking the first Grand Tour of the season ahead of the Tour de France and Vuelta a España
  • US: Berkshire Hathaway annual shareholders meeting in Omaha, led by chair and chief executive Warren Buffett. More than 40,000 shareholders normally attend

Sunday

  • Panama: presidential and parliamentary elections
  • 75th anniversary of the Council of Europe founded with the signing of the Treaty of London

US IPO Week Ahead

Listings are currently scheduled for the week ahead.

  • Viking Holdings (VIK) is expected to price its IPO next week and begin to trade. The ocean and river cruise company is planning to sell 44M shares priced between $21 and $25 per share in an initial public offering. The company disclosed in an SEC filing that in 2023 it reported a loss of $1.85B on $4.7B in revenue as cruise operating expenses increased by 33% to $2.85B. Adjusted EBITDA loss widened to $1.09B from $367M in 2022 and the adjusted EBITDA margin expanded to 35.5% from 18.4% the year prior. Viking started in 1997 with just 4 river cruise ships but has expanded to 84 ships in operation with 650K passengers in 2023.
  • IPO quiet periods end on Contineum Therapeutics (CTNM) and Massimo Group (MAMO) to free up analysts to post ratings.
  • IPO lockup periods expire for blocks of shares of Alpha Technology Group (ATGL) and Lexeo Therapeutics (LXEO).

Focus on yourself and what YOU CAN INFLUENCE, set your trading plan and goals in be set for 2024. One suspects it will be a yearlong Groundhog Day for Biden, Trump, the GOP and the Democrats.  Throw on top of that Russia/Ukraine Israel/Gaza and China/Taiwan.

Trade Smart!

Akio Morita mistakes

Real Time Economic Calendar provided by Investing.com.

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Trade Smart!

-comment section below data-

Real Time Economic Calendar provided by Investing.com.

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Find us at www.traderscommunity.com

Follow our contributors on Twitter @traderscom @thepitboss16 @knovawave @ClemsnideClem

Note these charts, opinons news and estimates and times are subject to change and for indication only. Trade and invest at your own risk.

Trade Smart!