U.S. Equity Markets closed higher following the quietest trading week of the year-to-date. The NASDAQ 100 led Friday’s gains, closing higher by just 0.11%. The VIX got crushed, closing lower by 2.33% at a price of 16.77. U.S. Treasury Secretary Janet Yellen said that protecting America’s national-security interests outweighs economic considerations when it comes to the country’s complicated relationship with China. Relations between the two nations have worsened since the pandemic. In turn, both countries appear to be positioning themselves in independent economic blocs that strengthen their role in geopolitical affairs. American Express (AXP) has long been a status symbol of financial success. The company’s platinum card just seems to have a bigger-than-life shine to it. But even today, the financial heavyweight is showing us that the economy is starting to take its toll on all Americans. On Thursday, American Express reported its earnings for the first quarter. The report showed its profits missed expectations and were lower than the year prior. First-quarter net income came in at $1.8 billion, or $2.40 per share. That was down from $2.1 billion (or $2.73 per share) a year ago, signifying a 13% decline. Now, a large reason for this decline was the substantial increase to provisions – or the money set aside in anticipation that cardholders won’t be able to repay their debt. When companies begin to significantly increase their provision for loan losses, it signals that the economy is worsening. In fact, American Express increased provisions to its highest level since the COVID-19 pandemic began. American Express has two categories to determine growth: write-offs and reserve build/release. Write-offs are loans that they have already deemed won’t be paid back. Reserve build/release is the amount they have set aside for the anticipation of further bad loans. The level of write-offs rose to its highest level since the fourth quarter of 2019 – and it is up 156% from a year earlier. However, Chief Financial Officer Jeff Campbell remained optimistic about consumer spending weathering the economic storm. He said that customers are proving resilient despite the mixed economic environment that we find ourselves in. While spending levels remain elevated compared to a year ago, there is already a pullback occurring in the rate of growth. Over the last two quarters, American Express had an average year-over-year growth rate for billed business (transactions) of 15.5%. A year earlier, those same two quarters averaged annual growth of 34%. The travel and entertainment segment continues to see a post-COVID lockdown surge. In the first quarter of 2023, travel and entertainment saw growth of $5 billion since the previous quarter. However, total goods spending decreased $12 billion from the prior quarter. Campbell even admitted that spending growth has slowed in the past few months, and they are watching it closely and thinking about overall economic conditions. The bottom line is that stubbornly high inflation combined with a surge in borrowing costs have taken their toll on consumers. Because American Express typically has a wealthier consumer base than its peers, any signs of declining growth should be a clear indicator of tough times ahead. European Markets closed higher. Euro-Zone Business activity is resilient. Growth in the region rose to its highest in nearly a year driven by a continued surge in the services sector. The slight easing of pricing pressures combined with the fact that manufacturing activity remained in contraction territory is not likely to curb further rate hikes from the European Central Bank. In Asia, U.S. President Joe Biden is planning on signing an executive order that aims at limiting American companies’ investments in the Chinese economy. The proposed measured is likely to be signed following its introduction to fellow Group of Seven nations – which meet May 19 in Japan. This move would further escalate the economic warfare the U.S. has waged against China in the past few years, which included tariffs on Chinese imports and a restriction on American exports. Elsewhere, Oil rose 0.5% while despite a weaker Dollar Gold ended Friday with a loss of 0.9%.
For anyone following my Platinum Service it made 125 points on Friday and is now ahead by 2403 points for April after closing March with a gain of 6168 points, while finishing February with a gain of 3164 points, after closing January with a gain of 4687 points, while finishing December with a gain of 2054 points. November ended with a gain of 4789 points, while finishing October with a record gain of 9619 points, making 6660 points in September, after closing August with a gain of 2228 points, having made 2660 points in July, following a gain of 3371 points in June. The Service made 3651 points in May, after making 762 points in April, following a gain of 5883 points in March. The Platinum Service made an impressive 5324 points in February, after ending January with a gain of 3878 points, more than making up for December’s 932 points loss. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1600 points. I have a YouTube Channel which contains recent interviews I have given This can be viewed by clicking HEREHERE Please subscribe to this for new interview notification
Equities
The S&P 500 closed 0.09% higher at a price of 4133.
The Dow Jones Industrial Average closed 22 points higher for a 0.07% gain at a price of 33,808.
The NASDAQ 100 closed 0.11% higher at a price of 13,000.
The Stoxx Europe 600 Index closed 0.34% higher.
Yesterday, the MSCI Asia Pacific closed 0.30% higher.
Yesterday, the Nikkei closed 0.33% lower at a price of 28,564.
Currencies
The Bloomberg Dollar Spot Index closed 0.4% lower.
The Euro closed 0.2% higher at $1.0990.
The British Pound closed 0.1% lower at 1.2432.
The Japanese Yen fell 0.1% closing at $134.25.
Bonds
Germany’s 10-year yield closed 4 basis points higher at 2.48%.
Britain’s 10-year yield closed 1 basis points higher at 3.78%.
U.S.10 Year Treasury closed 3 basis points higher at 3.57%.
Commodities
West Texas Intermediate crude closed 0.5% higher at $77.87 a barrel.
Gold closed 0.9% lower at $1981.10 an ounce.
This morning on the Economic Front we have the German IFO Survey at 9.00 am. Next, we have the Chicago Fed National Activity Index at 1.30 pm. Finally, at 3.30 pm we have the Dallas Fed Manufacturing Business Index.
Cash S&P 500
So far, my suspicions that last week’s 4173 high is proving itself to be a top of significance. Although Friday was another boring session, internally the market is weak as shown by the McClellan Oscillator which closed at -10 on Friday night. This should not be happening with the S&P close to its 2023 highs. This week is all about earnings of which there will be plenty reported while all economic reports will be gauged with a view of how it may impact the Fed’s decision next week. The market is pricing in another 25-basis point rate hike. Either way we are approaching the end of the rate hike cycle. This morning the S&P is trading lower at 4115. We have strong support from 4070/4085. I will now lower my buy level to this range with a tight 4059 ‘’Closing Stop’’. I will also lower my S&P sell level to 4132/4147 with a lower 4161 ‘’Closing Stop’’.
EUR/USD
No Change I am still flat. I will leave my buy level unchanged at 1.0850/1.0920 with the same 1.0885 ‘’Closing Stop’’. I still do not want to be short the Euro at this time.
June Dollar Index
No Change. I am still a buyer on any dip lower to 100.70/101.30 with the same 99.95 ‘’Closing Stop’’. I still do not want to be short the Dollar at this time.
Cash DAX
Just before the New York close, the DAX rallied to my 15910-sell level. This morning the DAX is trading lower. I emailed my Platinum Members to exit any short position at my revised 15845 T/P level and I am now flat. Today, I will again be a small seller from 15930/16030 with the same 16105 ‘’Closing Stop’’. Given how overbought the DAX is trading I still do not want to be long the market at this time.
Cash FTSE
No Change. I am still short at an average rate of 7885 with the same 7830 T/P level. I will leave my 7975 ‘’Closing Stop’’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dow Rolling Contract
The Dow traded in a narrow range on Friday, and I am still flat. I will continue to be a strong buyer on any dip lower to 33200/33450 with the same 32995 wider ‘’Closing Stop’’. Until the Dow breaks and closes below its 50-Day Moving Average (33102) I have no interest in having a short position.
Cash NASDAQ 100
I am still flat. This morning the NDX is trading 60 points below Friday’s close. I will now lower my sell level to 13040/13190. I will leave my 13305 ‘’Closing Stop’’ unchanged on any short position. The NDX has short-term support from 12670/12820 where I will be a strong buyer with a 12595 tight ‘’Closing Stop’’.
June BUND
The Bund sold off to my 133.66 buy level on Friday. I am still long with a now lower 134.10 T/P level. I will add to this position at 133.00 while leaving my 132.25 ‘’Closing Stop’’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Gold Rolling Contract
Gold got hit hard on Friday as yet again Gold is finding strong resistance from 2000/2050. This move lower saw my 1874 buy level triggered. My big concern about Gold is nearly everyone is long. Secondly if Gold cannot rally on a weak Dollar then this is a major worry for Gold’s underlying strength. As a result, I emailed my Platinum Members to exit any long Gold position at 1980 and I am now flat. Gold has short-term support from 1945/1960 where I will again be a buyer with a 1929 wider ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 1972.
Silver Rolling Contract
Silver traded lower to my 24.90 buy level. I will add to this position at 24.10 while leaving my 23.35 ‘’Closing Stop’’ unchanged. I will now lower my T/P level on this position to 25.60.
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