U.S. Indices closed mixed on Wednesday (SPX +0.1%, NDX +0.6%, DJI -0.2%). Gains were seen in the Mag-7 led sectors, namely, Communications (GOOGL +3.7%), Tech (NVDA +4.2%), and Consumer Discretionary (TSLA +4.0%). Additionally, AMD’s announced USD 6bln stock buyback boosted sentiment in the semiconductor space, with the company noting the decision reflects confidence in growth prospects amongst other things. Meanwhile, Healthcare led the downside, while Materials and Real Estate followed. Weighing on the latter and small caps RUT’s underperformance (-0.9%) was the continued rally in US yields, where traders trimmed bets of Fed rate cuts by year-end, now seeing less than two full 25bps rate cuts on anticipation of improved economic growth following the 90-day US/China tariff reduction. In FX, the Dollar was firmer against major peers except for the Japanese Yen, which was helped by KRW-led regional strength. The Dollar was supported by the widening rate differential versus G10s and BBG reports that the US “are not looking to weaken the Dollar as part of trade deal”. Keeping on trade, White House Economic Adviser Hassett said that the admin has more than 20-25 deals on the table, and when President Trump returns, he will announce the next deal. FBN’s Gasparino reported that deals with Japan and South Korea are said to be “close”. Concerning Fedspeak, Goolsbee (2025 voter) and Jefferson (voter) were in fitting with recent rhetoric from Fed members, though Jefferson noted Q1 GDP data overstated deceleration in activity. For crude, prices settled lower with traders citing profit-taking following the recent upside, as attention turns to Ukraine/Russia talks on Thursday. Pressure on Iran from the US showed no signs of easing, with another set of sanctions from the US targeting individuals in China and Iran. The move is likely aimed at forcing Iran to make a deal, a prospect US President Trump reiterated he wants in Saudi Arabia today. Attention on Thursday turns to Fed Chair Powell and US data for April, namely, PPI, Retail Sales, Initial Claims, Industrial Production, and Philly Fed Business Index (May). Fed Member Goolsbee said some part of April inflation represents the lagged nature of data and the Fed is still holding its breath. Chicago Fed President said it will take time for current inflation trends to show up in data, and right now is a time for the Fed to wait for more information and try to get past the noise in the data. Goolsbee added that cannot jump to conclusions about long-term trends given all the short-term volatility. Meanwhile, Jefferson speaking for the first time since early April, said the current moderately restrictive policy rate is in a good place to respond to economic developments. On data, said Q1 GDP overstated deceleration in activity, and recent inflation data are consistent with further progress toward the 2% goal, but the future path is uncertain due to tariffs. Jefferson added watching closely for signs in hard data of weaker activity. On tariffs, stated that it could lead to higher inflation, and still uncertain if the impact would be temporary or persistent. Jefferson noted labour market is still solid. Elsewhere, both Oil and Gold closed lower on Wednesday by 1.23% and 2.21% respectively.
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For anyone following my Platinum Service it made 85 points yesterday and is now ahead by 1963 points for May after closing April with a gain of 7685 points after closing March with a gain of 2254 points while closing February with a gain of 4180 points. January ended with a gain of 2768 points while 1997 points were gained in December. October ended with a gain of 2179 points, after closing September with a gain of 4402 points, following a loss of 301 points in August. July gained 1908 points while June saw a gain of 2074 points. The Platinum Service made a record 9619 points in October 2022. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 2300 points. I have a YouTube Channel which contains recent interviews I have given This can be viewed by clicking HERE Please subscribe to this for new interview notification
Equities
The S&P 500 closed 0.1% higher at a price of 5892.
The Dow Jones Industrial Average closed 89 points lower for a 0.21% loss at a price of 42051.
The NASDAQ 100 closed 0.57% higher at a price of 21,319.
The Stoxx Europe 600 Index closed 0.24% lower.
This Morning, the MSCI Asia Pacific closed 0.7% lower.
This Morning, the Nikkei closed 0.98% lower at a price of 37,755.
Currencies
The Bloomberg Dollar Spot Index closed 0.08% lower.
The Euro closed 0.05% higher at $1.1192.
The British Pound closed 0.16% lower at 1.3284.
The Japanese Yen rose 0.54% closing at $146.67.
Bonds
Germany’s 10-year yield closed 3 basis points higher at 2.71%.
Britain’s 10-year yield closed 5 basis points higher at 4.72%.
U.S.10 Year Treasury closed 5 basis points higher at 4.54%.
Commodities
West Texas Intermediate crude closed 1.23% lower at $62.29 a barrel.
Gold closed 2.1% lower at $3175.10 an ounce.
This morning on the Economic Front we already had the release of German Wholesale price which fell 0.1% versus -0.2% expected. Also released was U.K. GDP which rose 0.02% versus 0.00% expected. Next, we have U.K. Labour Market Productivity at 9.30 am, followed by Euro-Zone Employment Change and GDP at 10.00 am. At 1.30 pm we have U.S. PPI, Retails Sales, Weekly Jobless Claims, Housing Starts and the Philly Fed Manufacturing Index. This is followed at 2.15 pm by Industrial Production and Capacity Utilisation. Finally, at 3.00 pm we have Business Inventories and the NAHB Housing Market Index.
Cash S&P 500
The real story ahead of the PPI and Retail Sales reports is Treasury rates, which continue to rise despite Tuesday’s soft CPI report. This afternoon, we will also hear from Powell as part of the Fed’s framework review—all while the 10-year rate breaches 4.5% and the 30-year approaches 5%. A 100% extension of the 30-year breakout, which appears to be a bull flag, suggests the 30-year rate could rise to 5.5%. A lot would have to go right—or rather, wrong—for that to happen, such as a hot PPI or possibly strong import prices on Friday. I don’t know, but if you believe in technical analysis, that looks like a clear bull flag to me. I am not sure what happens this time, but in some ways, the bond market now knows it can push Trump and Bessent around—and that is precisely what it is about to do. I don’t see how this could be good for the stock market. Maybe it is about tariffs, maybe it is about the debt, maybe it is about the next tax bill, whatever it is, we will soon find out. There are two reasons why rates are rising: inflation expectations, and not the short-term kind—we are talking about the 10-year kind. The 10-year inflation swap rose to 2.46% yesterday, and while that is still below the highs, if you are into technical analysis, maybe we are seeing an inverse head and shoulders pattern forming. At this point it is too early to be sure. The second reason is that investors are demanding more compensation for the risk of holding bonds, as the term premium continues to tick higher. We also saw the VVIX rally for a second consecutive session (The VVIX is the volatility of the VIX (Volatility Index), essentially measuring expected volatility of volatility. Often used to assess market stress or fear levels). The VIX also rose on Wednesday. In summary I am astonished by the rally in the S&P and especially the NDX over the past month. I cannot see the justification for such a move given the backdrop but at the end of the day the market price is the defining number. Yesterday my S&P plan worked well as the market finally rallied to my 5901-sell level before trading lower to my revised 5876 T/P level and I am now flat. Today, I will again be a seller from 5890/5910 with a lower 5926 ‘Closing Stop’. The 200 Day Moving Average comes in at 5755 this morning. Any dip to this area will attract strong buying. Therefore, I will be a buyer from 5753/5773 with the same 5725 wider ‘Closing Stop’. If I am taken short, I will have a T/P level at 5864. If I am taken long, I will have a T/P level at 5810.
EUR/USD
My latest 1.1140 average long Euro position worked well as the market rallied to my 1.1210 T/P level and I am now flat. It is troubling for equity bulls that the Dollar is unable to rally especially given the bullish news over the past two weeks. The Dollar is getting no benefit from its higher Treasury Yield which to say the least is unusual. The Euro has support below from 1.1030/1.1120 where I will again be a strong buyer with a lower 1.0965 ‘Closing Stop’. If I am taken long, I will have a T/P level at 1.1195.
Dollar Index
The Dollar is trading in the middle of Yesterday’s buy/sell ranges at 100.90 and I am still flat. I will now lower my sell level to 101.60/102.40 with a lower 103.05 ‘Closing Stop’. If I am taken short, I will have a T/P level at 101.10. I will not chase the market higher as I continue to be a buyer on any dip lower to 98.70/99.50 with the same 96.95 ‘Closing Stop’. If I am taken long, I will have a T/P level at 100.20.
Russell 2000
I am still flat. The Russell is trading lower at 2075 this morning. I will continue to be a buyer on any dip lower to 1960/2040 with the same 1895 ‘Closing Stop’. If I am taken long, I will have a T/P level at 2080. I still do not want to be short the market at this time.
FTSE 100
The FTSE has traded weak in comparison to both the American and European Indexes over the past week. I am still flat as the market never came close to Wednesday’s sell range, trading at a price of 8550 this morning. The FTSE has support below from 8410/8490 where I will be a small buyer with a 8345 ‘Closing Stop’. If I am taken long, I will have a T/P level at 8550. I no longer want to be short the FTSE at this time.
Dow Rolling Contract
I am still flat the Dow with no edge as the market again failed to hold its 200 Day Moving Average during Wednesday’s session. Today, I am going to stay flat the Dow to see how the market reacts to Monday’s gain. If this view changes, I will be back with a new update for my Platinum Members.
Cash NASDAQ 100
Wrong! I was stopped out of my latest 20950 short NDX position at 21305 and I am now flat. Given how severely overbought the NDX is I will continue to be a seller of rallies, especially if Treasury Yields continue to firm. The NDX has resistance from 21320/21520 where I will be a seller with a higher 21705 ‘Closing Stop’. If I am taken short, I will have a T/P level at 21130.
December BUND
The Bund never came close to Wednesday’s sell range and I am still flat. Bund Yields have backed up 40 Basis points over the past three weeks and so far this has been ignored by Equity Markets. The Bund is trading at a price of 129.30 this morning. We have short-term support below from 128.10/128.90 where I will be a buyer with a 127.45 ‘Closing Stop’. I no longer want to be short the Bund at this time.
Gold Rolling Contract
My Gold pan worked well. Wednesday’s 2% fall saw Gold hit my 3177-buy level before rallying to my revised 3189 T/P level and I am now flat. This morning Gold is trading a further 1.5% lower at 3132. We have strong support below from 3080/3105 where I will again be a buyer with a lower 3065 ‘Closing Stop’. If I am taken long, I will have a T/P level at 3135.
Silver Rolling Contract
The aggressive sell-off in Gold saw Silver hit my buy range for a now 32.20 long position. I will lower my T/P level to 32.90. I will add to this position at 31.40 while leaving my 29.95 ‘Closing Stop’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
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