Archive for Financial News – Page 215

05 May

The US regional banks are once again on the verge of collapse. The ECB cut the pace of rate hikes to 0.25%

By JustMarkets 

The US stock indices fell again Tuesday as the banking crisis continues. The KBW regional banking index fell more than 6% to its lowest level since November 2020. The Dow Jones Index (US30) was down by 1.08%, and the S&P 500 Index (US500) fell by 1.16% at the stock market’s close. The NASDAQ Technology Index (US100) decreased by 1.08% yesterday.

Regional banks fell sharply yesterday as fears of further stress on small lenders persist amid fears that higher interest rates will hurt banks open to long-term assets, including Treasuries and commercial loans.

The US Bureau of Labor Statistics (BLS) showed yesterday that the number of job openings in March fell to 9.590 million, below estimates of 9.775 million, according to the JOLTs report. At the same time, the US Commerce Department reported that manufacturing orders rose by 0.09% from the previous month, exceeding estimates.

Concerns about the economy were exacerbated by new fears that the US could default as early as June 1 if Congress does not raise the debt ceiling. Treasury Secretary Janet Yellen warned Monday that the United States could run out of cash and default on its debt as early as June 1.

Uber (UBER) jumped by 11% after reporting lower-than-expected first-quarter losses and optimistic forecasts.

Equity markets in Europe traded flat on Tuesday. German DAX (DE30) decreased by 1.23%, French CAC 40 (FR40) fell by 1.45% yesterday, Spanish IBEX 35 (ES35) lost 1.72%, British FTSE 100 (UK100) closed on Tuesday down by 1.24%.

The overall inflation rate in the Eurozone rose in April, remaining well above the European Central Bank’s target levels, but the rise in core prices slowed down. The annualized consumer price index rose from 6.9% to 7.0%. Core inflation (which excludes food and energy prices) fell from 5.7% to 5.6%. Instead of providing some clarity as to how much the central bank might raise rates, the latest numbers have only blurred the picture. Market participants are debating whether the ECB will raise rates on Thursday by 50 or 25 basis points. On the one hand, rising overall inflation could prompt hawkish ECB officials to advocate another 0.5% hike. On the other hand, a slowdown in core price growth could shift the balance towards a more dovish stance and lead to a compromise 25 basis point rate hike.

Gold moved back above $2,000 an ounce on Tuesday as talk of a potential US default led investors to look for safe-haven assets. If gold maintains its current upward trend, the spot price could try again to reach an April high of around $2,050 or higher.

Oil fell more than 5% yesterday due to fears of a US default. Now the next step is up to OPEC+. There is a high probability that the cartel will cut its daily production even more. OPEC+ will try by all means to keep oil prices above $80 a barrel.

Asian markets were mostly rising yesterday. Japan’s Nikkei 225 (JP225) gained 0.12%, China’s FTSE China A50 (CHA50) didn’t trade yesterday, Hong Kong’s Hang Seng (HK50) gained 0.20% on the day, India’s NIFTY 50 (IND50) jumped by 0.46%, while Australian S&P/ASX 200 (AU200) showed a negative result of 0.92% decline on Tuesday.

S&P 500 (F) (US500) 4,119.59 −48.28 (−1.16%)

Dow Jones (US30)33,684.53 −367.17 (−1.08%)

DAX (DE40) 15,726.94 −195.44 (−1.23%)

FTSE 100 (UK100) 7,773.03 −97.54 (−1.24%)

USD Index 101.90 −0.25 (−0.25%)

Important events for today:
  • – New Zealand Unemployment Rate at 01:45 (GMT+3);
  • – New Zealand RBNZ Gov Orr Speaks at 02:00 (GMT+3);
  • – Australia Retail Sales (m/m) at 04:30 (GMT+3);
  • – Eurozone Unemployment Rate (m/m) at 12:00 (GMT+3);
  • – US ADP Nonfarm Employment Change (m/m) at 15:15 (GMT+3);
  • – US ISM Services PMI (m/m) at 17:00 (GMT+3);
  • – US Crude Oil Reserves (w/w) at 17:30 (GMT+3);
  • – US FOMC Statement at 21:00 (GMT+3);
  • – US Fed Interest Rate Decision at 21:00 (GMT+3);
  • – US FOMC Press Conference at 21:30 (GMT+3).

By JustMarkets

 

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

Economics & Fundamentals Financial News
04 May

Murrey Math Lines 04.05.2023 (USDJPY, USDCAD)

By RoboForex.com

USDJPY, “US Dollar vs Japanese Yen”

On H4, the quotes are above the 200-day Moving Average, revealing the prevalence of an uptrend. The RSI has reached the oversold area. In this situation, a rebound from 6/8 (134.37) is expected, followed by growth to the resistance at 7/8 (135.93). The scenario can be cancelled by a downward breakout of the support at 6/8 (134.37), which could lead to a trend reversal and fall to the level of 4/8 (131.25).

USDJPY_H4
Risk Warning: the result of previous trading operations do not guarantee the same results in the future

On M15, the upper line of the VoltyChannel indicator is too far away from the current price, which means growth can only be triggered by a rebound from 6/8 (134.37) on H4.

USDJPY_M15
Risk Warning: the result of previous trading operations do not guarantee the same results in the future

USDCAD, “US Dollar vs Canadian Dollar”

On H4, the quotes are above the 200-day Moving Average, which indicates the prevalence of an uptrend. The RSI is testing the support line. In these circumstances, a test of 7/8 (1.3549) is expected, followed by a rebound from it and growth to the resistance at +1/8 (1.3793). The scenario can be cancelled by a downward breakout of 7/8 (1.3549), which could lead to a trend reversal and a decline to the support at 6/8 (1.3427).

USDCAD_H4
Risk Warning: the result of previous trading operations do not guarantee the same results in the future

On M15, after the test of 7/8 (1.3549), further growth of the pair will most probably be confirmed by a breakout of the upper border of VoltyChannel.

USDCAD_M15

Article By RoboForex.com

Attention!
Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex LP bears no responsibility for trading results based on trading recommendations described in these analytical reviews.

Financial News Forex and Currency News
04 May

The US Federal Reserve raised rates by 0.25% and indicates a likely pause in June. ECB intends to stay on the path of rate hike

By JustMarkets

The US stock indices fell again Tuesday as the banking crisis continues. The KBW regional banking index fell more than 6% to its lowest level since November 2020. The Dow Jones Index (US30) was down by 1.08%, and the S&P 500 Index (US500) fell by 1.16% at the stock market’s close. The NASDAQ Technology Index (US100) decreased by 1.08% yesterday.

Regional banks fell sharply yesterday as fears of further stress on small lenders persist amid fears that higher interest rates will hurt banks open to long-term assets, including Treasuries and commercial loans.

The US Bureau of Labor Statistics (BLS) showed yesterday that the number of job openings in March fell to 9.590 million, below estimates of 9.775 million, according to the JOLTs report. At the same time, the US Commerce Department reported that manufacturing orders rose by 0.09% from the previous month, exceeding estimates.

Concerns about the economy were exacerbated by new fears that the US could default as early as June 1 if Congress does not raise the debt ceiling. Treasury Secretary Janet Yellen warned Monday that the United States could run out of cash and default on its debt as early as June 1.

Uber (UBER) jumped by 11% after reporting lower-than-expected first-quarter losses and optimistic forecasts.

Equity markets in Europe traded flat on Tuesday. German DAX (DE30) decreased by 1.23%, French CAC 40 (FR40) fell by 1.45% yesterday, Spanish IBEX 35 (ES35) lost 1.72%, British FTSE 100 (UK100) closed on Tuesday down by 1.24%.

The overall inflation rate in the Eurozone rose in April, remaining well above the European Central Bank’s target levels, but the rise in core prices slowed down. The annualized consumer price index rose from 6.9% to 7.0%. Core inflation (which excludes food and energy prices) fell from 5.7% to 5.6%. Instead of providing some clarity as to how much the central bank might raise rates, the latest numbers have only blurred the picture. Market participants are debating whether the ECB will raise rates on Thursday by 50 or 25 basis points. On the one hand, rising overall inflation could prompt hawkish ECB officials to advocate another 0.5% hike. On the other hand, a slowdown in core price growth could shift the balance towards a more dovish stance and lead to a compromise 25 basis point rate hike.

Gold moved back above $2,000 an ounce on Tuesday as talk of a potential US default led investors to look for safe-haven assets. If gold maintains its current upward trend, the spot price could try again to reach an April high of around $2,050 or higher.

Oil fell more than 5% yesterday due to fears of a US default. Now the next step is up to OPEC+. There is a high probability that the cartel will cut its daily production even more. OPEC+ will try by all means to keep oil prices above $80 a barrel.

Asian markets were mostly rising yesterday. Japan’s Nikkei 225 (JP225) gained 0.12%, China’s FTSE China A50 (CHA50) didn’t trade yesterday, Hong Kong’s Hang Seng (HK50) gained 0.20% on the day, India’s NIFTY 50 (IND50) jumped by 0.46%, while Australian S&P/ASX 200 (AU200) showed a negative result of 0.92% decline on Tuesday.

S&P 500 (F) (US500) 4,119.59 −48.28 (−1.16%)

Dow Jones (US30)33,684.53 −367.17 (−1.08%)

DAX (DE40) 15,726.94 −195.44 (−1.23%)

FTSE 100 (UK100) 7,773.03 −97.54 (−1.24%)

USD Index 101.90 −0.25 (−0.25%)

Important events for today:
  • – New Zealand Unemployment Rate at 01:45 (GMT+3);
  • – New Zealand RBNZ Gov Orr Speaks at 02:00 (GMT+3);
  • – Australia Retail Sales (m/m) at 04:30 (GMT+3);
  • – Eurozone Unemployment Rate (m/m) at 12:00 (GMT+3);
  • – US ADP Nonfarm Employment Change (m/m) at 15:15 (GMT+3);
  • – US ISM Services PMI (m/m) at 17:00 (GMT+3);
  • – US Crude Oil Reserves (w/w) at 17:30 (GMT+3);
  • – US FOMC Statement at 21:00 (GMT+3);
  • – US Fed Interest Rate Decision at 21:00 (GMT+3);
  • – US FOMC Press Conference at 21:30 (GMT+3).

By JustMarkets

 

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

Economics & Fundamentals Financial News
04 May

STOX50 bears prowl ahead of ECB decision

By ForexTime 

European shares flashed red on Thursday as investors digested the latest rate hike by the Federal Reserve (Fed) and prepared for the European Central Bank’s (ECB) policy decision later today.

As widely expected, the Fed raised interest rates by 25 basis points (bps) and hinted at a pause in further increases during its meeting on Wednesday. However, Fed Chair Jerome Powell left some doubt after stating that economic developments could require further tightening. This sent the S&P 500 tumbling toward the 4070-support level on the daily charts. Nevertheless, the index still remains trapped within a range with a breakout on the horizon.

Our focus this morning falls on the STOX50 Index which could be influenced by the ECB rate decision.

The central bank is expected to raise interest rates by 25 bps, which would mark a downshift from 50 bps hikes triggered at each of its previous three policy meetings. However, core inflation remains sticky at 5.6% in April, still close to the all-time high of 5.7%. If still-stubborn inflation encourages policymakers to signal more hikes into the summer, this could rekindle growth fears – especially when factoring in how the eurozone narrowly avoided recession in Q1 2023. Such a development may weigh on European shares – dragging the STOX50 lower.

A deep dive into the technical picture…

The STOX50 index on the D1 time frame was in an uptrend which made a last higher top at 4427.5 on 21 April, bears then saw an opening and started accumulating positions.

After the top at 4427.5, prices broke through the 15 and 34 Simple Moving Averages (SMA) and the Momentum Oscillator changed direction to the lower side, both further confirming the growing bearish sentiment in the market.

A possible critical support level might be forming near the 34 Simple Moving Average on 4 May at 4272.5. If the level holds and the bulls manage to push the price higher, then a resistance level that formed at a lower top on 27 April at 4398.8 will be a good risk management area.

If bears manage to break through the potential critical support level at 4272.5, three possible price targets can be projected from there. Attaching the Fibonacci tool to the bottom at 4272.5, and dragging it to the lower top at 4398.8, the following targets may be calculated. The first target can be estimated at 4194.4 (161.8%) which is located at a weekly support level. The second price target may be calculated at 4068.1 (261.8%) and if the price manages to break through yet another weekly support level, then the third and final target might be expected at 3863.8 (423.6%).

If the resistance level at 4398.8 is broken, the above scenario is no longer valid.

As long as the bears keep on pulling the price down, the outlook for STOX50 on the D1 time frame will remain bearish.

Forex-Time-LogoArticle by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

Financial News Stock Market News
04 May

Growing Tech Firm Trends Toward Positive EBITDA

Source: Rob Goff   (4/28/23)

Revaluation of this Canadian software company depends on its accretive acquisitions and future growth, noted an Echelon Capital Markets report.

NowVertical Group Inc. (NOW:TSX.V; NOWVF:OTC), having achieved Q4/22 results in line with expectations, is “poised to deliver positive EBITDA and double-digit organic growth,” reported Echelon Capital Markets analyst Rob Goff in an April 21 data analytics note. This big data technology company provides industry-specific software and services to help entities affect vertically intelligent transformations.

“With demonstrated organic and inorganic growth, advancing scale and profitability, we look for an aggressive revaluation of the shares,” Goff wrote. “NowVertical’s track record and synergies warrant confidence that it will be successful.”

Attractive Potential Return

Accordingly, Echelon has a target price on NowVertical that projects a significant 224% possible return for investors. The target is CA$1.20 per share, whereas the Canadian software company’s current share price is about CA$0.37. NowVertical remains a Speculative Buy.

“Our bullish thesis looks for NowVertical to rapidly emerge as a midmarket-focused, fusion analytics firm leveraging its purpose-built solutions for high-value, data-driven decision-making with a focus on strategic verticals where it can build vertical intelligence and refined analytics capabilities,” explained Goff.

EBITDA Drain Trends Downward

During Q4/22, NowVertical generated US$8.4 million (US$8.4M) in revenue, near Echelon and the Street’s estimates of US$8.6M and US$8.9M, respectively, Goff reported.

Gross profit was US$3.9M, the same as Echelon’s estimate and higher than consensus’ US$3.7M forecast.

EBITDA was (US$0.1M) whereas Echelon and the Street both expected it to be US$0.

“We note the scaling impact behind NOW’s move to break even EBITDA on the quarter, having seen the EBITDA drain move from US$0.96M in Q1/22 to US$0.6M in Q2/22, with the drain at US$0.3M in Q3/22,” noted Goff.

NowVertical ended Q4/22 with US$3.8M in cash and net debt of US$11.7M. (These figures have since changed.)

Acquisitions Afford Growth

Between Q3/22 and now, April 2023, NowVertical acquired three companies: A10 Group, Acrotrend, and Smartlytics. Growth from its purchases is expected to reach about 20%, Goff wrote, once “revenue synergies from cross-selling gain traction.”

The Canadian software firm intends to continue with this growth strategy. It is targeting companies with US$10M-plus of revenue and acquisitions that are immediately positive free cash flow accretive, Goff pointed out.

“NowVertical’s recent moves to raise additional debt and equity capital leave [the company] positioned to execute against its mergers and acquisitions pipeline put at about US$90M,” wrote Goff.

Upcoming Catalysts

Goff reiterated the events that could move up NowVertical’s stock price. They are double-digit organic and backlog growth, positive EBITDA, and accretive acquisitions.

 

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Financial News Stock Market News
03 May

The cryptocurrency market digest (BTC, AVAX, PEPE). Overview for 03.05.2023

By RoboForex.com

The BTC on Wednesday is balancing near 28,641 USD. An important support for the leading crypto remains at 26,500 USD. There are no reasons for a steep decline yet.

However, anything may happen today. In the evening, the Federal Reserve System will close its two-days’ meeting and report its interest rate decision. If we suppose that the increase by 25 base points has already been accounted for by the market, we may even count on certain BTC growth at night.

Also, take a look at the Fed’s comments on the US public debt parameters as well.

The capitalisation of the crypto sector has dropped to 1.179 trillion USD. The part of the market taken by the BTC has dropped to 47.0%, and that of the ETH has increased to 19.1%.

Coiniar crypto exchange plans to work in the US market

An Australian digital asset exchange platform Coiniar does not quit its plans to get a place in the US market. The company considers North America to be a promising region for business even though control over crypto companies in the US is growing.

AVAX rose significantly

Over four months, the AVAX token increased by more than 65%. So, over Q1, 2023 the coin recovered from the losses of the second half of last year. These days the AVAX coin takes the 16th place in the rating of the most popular cryptocurrencies.

PEPE had a rally

The PEPE meme coin got on the Top 120 list of tokens and on the 17th line of the trade volumes rating. The market started talking about a new season of memecoins and wondering whether the DOGE and SHIB would catch up.

Gemini launched a new trading platform

Gemini launched a new trading platform for traders outside the US. Investors will be able to use perpetual contracts for the BTC against GUSD pair with leverage. The next contract to launch will be the ETH/GUSD one.

Article By RoboForex.com

Attention!
Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex LP bears no responsibility for trading results based on trading recommendations described in these analytical reviews.

Cryptocurrencies Financial News
03 May

The banking crisis in the US is getting worse. Inflationary pressures in Europe persist

By JustMarkets 

The US stock indices fell again Tuesday as the banking crisis continues. The KBW regional banking index fell more than 6% to its lowest level since November 2020. The Dow Jones Index (US30) was down by 1.08%, and the S&P 500 Index (US500) fell by 1.16% at the stock market’s close. The NASDAQ Technology Index (US100) decreased by 1.08% yesterday.

Regional banks fell sharply yesterday as fears of further stress on small lenders persist amid fears that higher interest rates will hurt banks open to long-term assets, including Treasuries and commercial loans.

The US Bureau of Labor Statistics (BLS) showed yesterday that the number of job openings in March fell to 9.590 million, below estimates of 9.775 million, according to the JOLTs report. At the same time, the US Commerce Department reported that manufacturing orders rose by 0.09% from the previous month, exceeding estimates.

Concerns about the economy were exacerbated by new fears that the US could default as early as June 1 if Congress does not raise the debt ceiling. Treasury Secretary Janet Yellen warned Monday that the United States could run out of cash and default on its debt as early as June 1.

Uber (UBER) jumped by 11% after reporting lower-than-expected first-quarter losses and optimistic forecasts.

Equity markets in Europe traded flat on Tuesday. German DAX (DE30) decreased by 1.23%, French CAC 40 (FR40) fell by 1.45% yesterday, Spanish IBEX 35 (ES35) lost 1.72%, British FTSE 100 (UK100) closed on Tuesday down by 1.24%.

The overall inflation rate in the Eurozone rose in April, remaining well above the European Central Bank’s target levels, but the rise in core prices slowed down. The annualized consumer price index rose from 6.9% to 7.0%. Core inflation (which excludes food and energy prices) fell from 5.7% to 5.6%. Instead of providing some clarity as to how much the central bank might raise rates, the latest numbers have only blurred the picture. Market participants are debating whether the ECB will raise rates on Thursday by 50 or 25 basis points. On the one hand, rising overall inflation could prompt hawkish ECB officials to advocate another 0.5% hike. On the other hand, a slowdown in core price growth could shift the balance towards a more dovish stance and lead to a compromise 25 basis point rate hike.

Gold moved back above $2,000 an ounce on Tuesday as talk of a potential US default led investors to look for safe-haven assets. If gold maintains its current upward trend, the spot price could try again to reach an April high of around $2,050 or higher.

Oil fell more than 5% yesterday due to fears of a US default. Now the next step is up to OPEC+. There is a high probability that the cartel will cut its daily production even more. OPEC+ will try by all means to keep oil prices above $80 a barrel.

Asian markets were mostly rising yesterday. Japan’s Nikkei 225 (JP225) gained 0.12%, China’s FTSE China A50 (CHA50) didn’t trade yesterday, Hong Kong’s Hang Seng (HK50) gained 0.20% on the day, India’s NIFTY 50 (IND50) jumped by 0.46%, while Australian S&P/ASX 200 (AU200) showed a negative result of 0.92% decline on Tuesday.

S&P 500 (F) (US500) 4,119.59 −48.28 (−1.16%)

Dow Jones (US30)33,684.53 −367.17 (−1.08%)

DAX (DE40) 15,726.94 −195.44 (−1.23%)

FTSE 100 (UK100) 7,773.03 −97.54 (−1.24%)

USD Index 101.90 −0.25 (−0.25%)

Important events for today:
  • – New Zealand Unemployment Rate at 01:45 (GMT+3);
  • – New Zealand RBNZ Gov Orr Speaks at 02:00 (GMT+3);
  • – Australia Retail Sales (m/m) at 04:30 (GMT+3);
  • – Eurozone Unemployment Rate (m/m) at 12:00 (GMT+3);
  • – US ADP Nonfarm Employment Change (m/m) at 15:15 (GMT+3);
  • – US ISM Services PMI (m/m) at 17:00 (GMT+3);
  • – US Crude Oil Reserves (w/w) at 17:30 (GMT+3);
  • – US FOMC Statement at 21:00 (GMT+3);
  • – US Fed Interest Rate Decision at 21:00 (GMT+3);
  • – US FOMC Press Conference at 21:30 (GMT+3).

By JustMarkets

 

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

Economics & Fundamentals Financial News
02 May

How “Insane Optimism” is at Work in the Stock Market

“Stock investors are so bullish that they are…”

By Elliott Wave International

Many technical indicators are highly useful, yet the price moves of the stock market really boil down to two things: optimism and pessimism.

Major trend turns tend to occur when extremes are reached in either optimism or pessimism.

Most recently, optimism has been in charge. The question is: Has an extreme been reached?

Well, there are at least two signs which strongly point to a “yes” answer.

The first sign to which I’d like to call your attention regards the S&P 500 dividend yield. What you need to know is that stock prices tend to top when dividend yields are low and bottom when they’re high.

Robert Prechter explains how this is related to optimism and pessimism in his recently published April Elliott Wave Theorist, which covers major financial and social trends:

Investors in a positive mood bid up stock prices regardless of dividend yield, and investors in a negative mood adjust stock prices lower regardless of dividend yield. Yield simply follows the waves of optimism and pessimism.

The April Theorist provided more insight with this chart and associated commentary:

[The chart] shows that S&P companies’ dividends today yield only 1.66% annually. Investors are putting up with that low payout despite the virtually riskless 5% yield of Treasury bills, which is three times as much. Stock investors are so bullish that they are certain their capital gains will make dividends irrelevant.

The second sign of insane optimism is revealed in this March 29 Bloomberg news item:

They’ve become a high-speed, high-risk, high-reward tool in turbulent markets: Options with shelf lives so short they expire in less than a day [known as “zero-day-to-expiry’ options].

… Success is far from certain, and even some Wall Street pros don’t fully understand them.

That hasn’t deterred thrill-seeking retail investors from piling into 0DTE options.

As the April Theorist says:

Options Gambling Is Another Symptom of Historic Optimism

Looking beyond sentiment extremes, the April Theorist also shows the stock market’s Elliott wave structure in monthly and hourly charts. The information revealed in these charts is very much worth knowing.

If you’re unfamiliar with Elliott wave analysis, read Frost & Prechter’s Wall Street classic, Elliott Wave Principle: Key to Market Behavior. Here’s a quote:

All waves may be categorized by relative size, or degree. The degree of a wave is determined by its size and position relative to component, adjacent and encompassing waves. Elliott named nine degrees of waves, from the smallest discernible on an hourly chart to the largest wave he could assume existed from the data then available. He chose the following terms for these degrees, from largest to smallest: Grand Supercycle, Supercycle, Cycle, Primary, Intermediate, Minor, Minute, Minuette, Subminuette. Cycle waves subdivide into Primary waves that subdivide into Intermediate waves that in turn subdivide into Minor waves, and so on. The specific terminology is not critical to the identification of degrees, although out of habit, today’s practitioners have become comfortable with Elliott’s nomenclature.

If you’d like to read the entire online version of the book, you may do so for free once you join Club EWI, the world’s largest Elliott wave educational community.

A Club EWI membership is also free.

Get started now by following this link: Elliott Wave Principle: Key to Market Behavior — get free and instant access.

This article was syndicated by Elliott Wave International and was originally published under the headline How “Insane Optimism” is at Work in the Stock Market. EWI is the world’s largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

Financial News Stock Market News
02 May

US debt ceiling drama underscores case for Bitcoin

By George Prior

As the US hurtles towards a potential high-stakes default on its debt, the compelling case for Bitcoin is further strengthened, asserts the CEO and founder of one of the world’s largest independent financial advisory, asset management and fintech organizations.

The assessment from deVere Group’s Nigel Green follows reports that US President Joe Biden has invited top congressional leaders for a May 9 meeting regarding the debt ceiling after The Treasury Department warned on Monday a default could come sooner than expected – possibly as soon as June 1.

The debt ceiling is the amount of money the US is able to borrow to pay its bills. Since the cost of running the government is far greater than federal tax revenues, the US must raise additional money by selling Treasury bonds – but it cannot do this after hitting the debt ceiling.

If the US is unable to pay its bills, it will default on its debt. This would be the first in US history.

Should this happen, it would “cause irreparable harm to the US economy, the livelihoods of all Americans, and global financial stability,” Janet Yellen, the Treasury Secretary, wrote in a letter to the then new House Speaker Kevin McCarthy.

In a letter to members of Congress on Tuesday, Ms Yellen said that “We have learned from past debt limit impasses that waiting until the last minute to suspend or increase the debt limit can cause serious harm to business and consumer confidence, raise short-term borrowing costs for taxpayers, and negatively impact the credit rating of the United States.”

Her announcement came on the same day as the Congressional Budget Office (CBO) reported that there is a “significantly greater risk that the Treasury will run out of funds in early June.”

Nigel Green says: “The emergency meeting called by Biden is a step in the right direction in a monumentally high-stakes game between lawmakers.

“Democrats have said they would not negotiate with Republicans over extending the debt ceiling, while House Speaker Kevin McCarthy has promised not to extend the limit without cuts to the federal budget.”

While the likelihood of a US default remains “unlikely” at this stage, according to the deVere Group CEO, he affirms the debt ceiling drama “further strengthens the compelling case for Bitcoin” for two main reasons.

“First, this saga underscores that the US dollar’s future trajectory is precarious and lies in the hands of opposing and increasingly divided politicians reaching difficult agreements.

“As the gridlock in Washington DC intensifies over the dollar debt ceiling, it seems inevitable that a growing number of retail and institutional investors will want to circumnavigate the shenanigans and look to alternatives which are outside of political controls, as well as having other advantages such as being digital, global and borderless.
“It’s a huge mess and it’s hitting the dollar’s credibility at a time when it already appears to be losing some of its global dominance – this is bullish for Bitcoin.

He continues: “And second, the debt ceiling is likely to be raised in the end, meaning it can issue more debt to generate more capital. However, the government might find it hard to attract buyers, forcing the Federal Reserve back into Quantitative Easing (QE) – or money printing.

“QE is typically good for riskier assets such as Bitcoin – as we saw during the last stimulus round – and it will also likely further hit the long-term value of the dollar, providing a boost for the cryptocurrency.”

Nigel Green concludes: “The debt ceiling drama underlines the flaws in the current fiat-dominated system.

“It strengthens my long-standing argument that the times ahead are destined to be radically different from what we have all experienced in our lifetimes so far.

“I believe that increasingly, there will be a mixed system. Some will be currencies from governments, including digital and non-digital, and some will be digital and decentralised, such as Bitcoin.”

About:

deVere Group is one of the world’s largest independent advisors of specialist global financial solutions to international, local mass affluent, and high-net-worth clients.  It has a network of more than 70 offices across the world, over 80,000 clients and $12bn under advisement.

Economics & Fundamentals Financial News
02 May

The RBA unexpectedly raised the rate by another 0.25%. First Republic Bank was sold to JPMorgan Chase

By JustMarkets 

At the close of the stock exchange on Monday, the Dow Jones Index (US30) decreased by 0.14%, and the S&P 500 (US500) lost 0.04%. NASDAQ Technology Index (US100) fell by 0.11% yesterday.

The US manufacturing activity declined for the sixth straight month in April, the longest period since 2009 and a sign of trouble in the manufacturing sector. Order numbers improved slightly but remained in contractionary territory. The good news is that the numbers show that the manufacturing sector is contracting at a slower pace. At the same time, manufacturers face many challenges, including higher borrowing costs, tighter credit conditions, lower demand for goods and still higher prices. A senior portfolio manager at Northwestern Mutual Wealth Management Co. believes Monday’s PMI data bolstered expectations for a 25 basis point increase in Federal Reserve interest rates in May and the likelihood of a June increase.

First Republic Bank was sold to JPMorgan Chase (JPM), the second-largest bankruptcy in US history. First Republic has been struggling since the March collapse of Silicon Valley Bank and Signature Bank. Yesterday morning, the US regulators seized First Republic Bank and sold all of its deposits and most of its assets to JPMorgan Chase Bank. As of April 13, First Republic had about $229 billion in total assets and $104 billion in total deposits, according to the FDIC. The FDIC estimated that its deposit insurance fund would suffer a $13 billion loss because of the transfer to First Republic.

The World Bank on Monday unveiled a new methodology and improved safeguards for assessing the business climate in 180 countries. The bank retracted its Doing Business rating in September 2021, citing an internal audit and an independent investigation that found that top World Bank officials pressured staff to change the data to favor China. A pilot issue of a new annual series called “Business Ready” will be published in the spring of 2024.

Stock markets in Europe did not trade yesterday due to the holiday. There is no doubt that Europe’s central bank will raise borrowing costs for the seventh consecutive time Thursday as inflation shows resilience. Many analysts are currently betting on a quarter-point hike. But if today’s consumer price data, especially the core indicator, shows signs of growth, the ECB could stay on an aggressive path to raise rates.

Weaker Chinese production data outweighed support for OPEC+ supply cuts, and oil is down again. Typically, from April through fall, oil prices rise because of increased demand during the summer months. But this year, economic conditions are outweighing demand. This could lead to OPEC+ countries having to cut production again to keep prices above $80 a barrel.

Asian markets rose strongly yesterday. Japan’s Nikkei 225 (JP225) gained 0.92% over the day, China’s FTSE China A50 (CHA50) added 0.77% yesterday, Hong Kong’s Hang Seng (HK50) increased by 0.27% over the day, India’s NIFTY 50 (IND50) jumped by 0.84%, and Australia’s S&P/ASX 200 (AU200) closed positive 0.35%.

Japan’s economy is recovering moderately from the downturn caused by COVID-19, but bankruptcies are rising, according to the Japanese government’s monthly economic report. The report echoes the warning of global financial volatility in response to the recent collapse of Western banks.

The Reserve Bank of Australia (RBA) unexpectedly raised its rate by 25 basis points, saying that further monetary tightening is still needed as it takes steps to rein in the country’s stubborn inflation. The RBA said in a statement that recent data showed a welcome decline in inflation, but the main forecast is still that it will be a couple of years before inflation returns to the upper end of the target range.

S&P 500 (F) (US500) 4,167.87 −1.61 (−0.04%)

Dow Jones (US30)34,051.70 −46.46 (−0.14%)

DAX (DE40) 15,922.38 0 (0%)

FTSE 100 (UK100) 7,870.57 0 (0%)

USD Index 102.17 +0.51 (+0.50%)

Important events for today:
  • – Australia RBA Interest Rate Decision (m/m) at 07:30 (GMT+3);
  • – Australia RBA Rate Statement (m/m) at 07:30 (GMT+3);
  • – German Retail Sales (m/m) at 09:00 (GMT+3);
  • – Switzerland Manufacturing PMI (m/m) at 10:30 (GMT+3);
  • – German Manufacturing PMI (m/m) at 10:55 (GMT+3);
  • – Eurozone Manufacturing PMI (m/m) at 11:00 (GMT+3);
  • – UK Manufacturing PMI (m/m) at 11:30 (GMT+3);
  • – Eurozone Consumer Price Index (m/m) at 12:00 (GMT+3);
  • – Australia RBA Gov Lowe Speaks at 14:20 (GMT+3);
  • – US JOLTs Job Openings (m/m) at 17:00 (GMT+3).

By JustMarkets

 

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

Economics & Fundamentals Financial News
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