Equity Markets closed mixed following another volatile trading session on Wall Street. Although, a late rally saw the Dow close higher, the NDX got hit hard falling by 2.2%. Late Monday, Snap (SNAP) lowered its second-quarter earnings and revenue outlook, saying it now anticipates both to come in below the company’s prior forecast. In the eyes of Money Managers, this updated guidance raises questions about the reliability of corporate outlooks for 2022. In most cases, management teams do not often update full-year guidance after the first quarter. Under normal circumstances, they provide these figures about six weeks into the second quarter. That is because if things are going poorly, there is still time to overcome the disappointing figures. On the flip side, if they post strong financials, they don’t want to get ahead of themselves with large outlook increases. But with Snap’s guidance release, the situation has become more uncertain to money managers looking to weather rising inflation, corporate profitability woes, and shifting consumer-spending habits. Looking in more detail at Fed Member Bullard’s interview late Monday where he is trying to front load rate hikes so the Fed have room to cut rates next year. Thought of another way, if the Fed’s interest-rate outlook begins to change materially in the second half of this year, it could boost growth sentiment for 2023 and beyond. That could boost the outlook for risk assets like stocks… The St. Louis chief said the more the central bank can front-load rate hikes, the more flexibility it will have down the road. Bullard believes that being more aggressive with policy now will set realistic inflation expectations going forward. He feels the longer the central bank takes to slow inflation, the more expectations for rising prices will be anchored. In other words, Bullard is worried a continued rise in prices will make households and businesses increasingly pessimistic about the buying power of the U.S. Dollar. If that happens, spending will slow as people want to hang on to more of their disposable income. However, that is the worst-case scenario. Bullard does anticipate growth will slow this year. After all, an economic expansion of 5.7% made for a “banner year” in 2021 and was well above the 2.3% average in the decade prior to the pandemic-driven drop. He still thinks the economy is in great shape, and it is simply difficult to lap such strong numbers. The policymaker said he anticipates the national Unemployment rate to continue to move lower throughout this year, possibly moving below 3%. Bullard said economic growth should remain above trend. And he suggested output could increase in the back half. As a result, the job market will likely remain tight. Bullard assured that despite the negative Gross Domestic Product growth in the first quarter, he still anticipates economic expansion of 2.5% to 3%. He said a recession this year is unlikely. But the downside of this strength is higher interest rates. Yet, he warned businesses about taking too much advantage of pricing power. Bullard said consumers are making changes in spending. Individuals in his district are making choices in favour of cheaper products over premium-label brands. So, he stated companies need to be leery of just how much more they can raise prices without seeing demand drop. Within the S&P 500, 6 of the 11 sectors finished lower. European Markets closed lower. European Central Bank President Christine Lagarde reiterated it is likely to exit negative interest rates in the Third Quarter, suggesting two 0.25% rate hikes by the end of September. The National Statistics Office of France’s Business Confidence Index for May topped estimates on improving retail-and services-sector optimism. S&P Global’s preliminary U.K. Composite Purchasing Managers’ Index data for May was lower than anticipated due to a sharp decline in services-sector activity versus April. S&P Global’s Preliminary Euro-Zone composite Purchasing Managers’ Index data for May was worse than anticipated, as manufacturing and services activity eased. In Asia, The Taiwanese Ministry of Economic Affairs’ Industrial Production growth figures for April were stronger than expected due to a surge in semiconductor and medical-goods output. The Bank of Korea’s Consumer Confidence Index for May declined versus April as pessimism about inflation and the economic outlook increased. Jilbun Bank’s preliminary Japan Composite Purchasing Managers’ Index data for May rose compared with April, marking the third straight month of expansion thanks to a rebound in services. China’s State Council introduced $21 billion worth of tax breaks for businesses in addition to $45 billion worth of railway construction bonds to support economic growth. Elsewhere, Oil fell 0.47% lower on news that the European Union may soon ban Russian oil, while Gold rose 0.38% on Dollar weakness.
To mark my 2550th issue of TraderNoble Daily Commentary I am offering a special 2-Year Rate of Euro 2750 for my Platinum Service which includes 1 to 4 updated emails throughout the trading day to demonstrate this value, a monthly subscription over the same period would cost 4440 euro in total This offer represents a 38% discount and is open to both new and existing members. If anyone is interested in this offer can you please email me on bryan@tradernoble.com for details
For anyone following my Platinum Service it made 435 points yesterday and is now ahead by 3044 points for May having made 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, having made 2466 points in November, 1028 points in October, 2866 points in September, 1543 points in August, and 996 points in July. The Platinum Service made 1366 points in June, 1439 points in May, 1244 points in April, after ending March with an impressive gain of 3769 points. 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 HERE Please subscribe to this for new interview notification
Equities
The S&P 500 closed 0.81% lower at a price of 3941.
The Dow Jones Industrial Average closed 48 points higher for a 0.15% gain at a price of 31,928.
The NASDAQ 100 closed 2.2% lower at a price of 11,769.
The Stoxx Europe 600 Index closed 0.8% lower.
Yesterday, the MSCI Asia Pacific Index fell 0.9%.
Yesterday, the Nikkei closed 0.94% lower at a price of 26,748.
Currencies
The Bloomberg Dollar Spot Index closed 0.4% lower.
The Euro closed 0.4% higher at $1.0735.
The British Pound closed 0.4% lower at 1.2534.
The Japanese Yen rose 0.9%, closing at $126.84.
Bonds
Germany’s 10-year yield closed five basis points lower at 0.96%.
Britain’s 10-year yield closed nine basis points lower at 1.88%.
US 10 Year Treasury closed 10 basis points lower at 2.76%.
Commodities
West Texas Intermediate crude closed 0.47% lower at $109.77 a barrel.
Gold closed 0.38% higher at $1865.10 an ounce.
This morning on the Economic Front we have German GDP and the GFK Consumer Confidence at 7.00 am. This is followed by speeches from ECB Members’ Panetta, Lagarde and Lane at 8.00 am, 9.00 am and 10.45 am respectively. Next, we have U.S. Durable Goods Orders at 1.30 pm and a speech from Fed Member Brainard at 5.15 pm. Finally, we have the FOMC Minutes from last Month’s Fed Meeting at 7.00 pm.
Cash S&P 500
The S&P again traded in a wide range yesterday following the 29% fall in SNAP shares. Central Banks continue to reiterate that the Economies are strong while Companies are saying the opposite: Things are slowing down rapidly, we will have to pause hiring or start layoffs. Social Media stocks fell a combined $100bn yesterday as the markets certainly believe the recent awful guidance from companies and this was reflected in the wide price action that we saw over the past 24 hours. The S&P made a low at 3875 before having a rebound to a new high for the day at 3956 before falling 15 Handles into the close. My S&P plan worked well with the market hitting my 3920 buy level before rallying to my 3937 T/P level and I am still flat. As I wanted to bank some points for yesterday’s session after Monday’s non-event I did not buy the S&P a second time but I am pleased that we managed to rebound off the afternoon lows. Today, I will again be a buyer on any dip lower to 3895/3925 with a 3869 wider stop which is just below yesterday’s low print.
EUR/USD
The Euro continues to rally as expected. The Euro is trading at 1.0735 as I go to press. I will now raise my buy level to 1.0580/1.0640 with a higher 1.0515 tight stop.
March Dollar Index
The Weekly Reversal in the Dollar suggests that at the very least we have seen a meaningful top in the Dollar. I am still flat the Dollar as the market again just missed my 102.50 sell level. I will now lower my sell level to 102.30/103.00 with the same 103.65 tight stop. If I am taken short I will have a T/P level at 101.80.
Cash DAX
My DAX plan worked well with the market trading lower to my 13950 buy level before rallying to a rebound high at 14040, allowing me to cover this position at my revised 14005 T/P level as emailed to my Platinum Members and I am now flat. The DAX has support from 13780/13860 where I will be an aggressive buyer with a 13795 wider stop.
Cash FTSE
Frustratingly, the FTSE missed my initial 7410 buy level by 20 points before rallying to sit above 7520 as I go to press. I will now raise my buy level to 7390/7450 with a higher 7339 stop. I still do not want to be short the FTSE at this time.
Dow Rolling Contract
My Dow plan worked well with the market trading lower to my initial 31540 buy level before rallying to my revised 31690 T/P level and I am still flat. The Dow was the strongest of the U.S. Indexes yesterday after rallying over 600 points off its 31360 afternoon low print. As I mentioned yesterday, the Dow needs to break and close over the key 32150/32400 resistance level for a more sustained rally to occur. I will be a small seller in this range with a 32605 ‘’Closing Stop’’. The Dow has short-term support at yesterday’s low and I will now be an aggressive buyer from 31250/31550 with a wider 30995 stop. The Fear & Greed Index is still oversold, closing last night with a print of 12 which is still a reading of ‘’Extreme Fear’’.
Cash NASDAQ 100
No Change. I continue to nurse last month’s 14327 long position which I have now carried into May. I will now lower my exit level on this position to 13400 which I am hopeful we will see this month. Despite how oversold the NDX is trading I will not add to my existing long position. If this changes I will be back with a new update for my Platinum Members.
June BUND
My latest 153.10 long Bund position worked well with the market rallying to my 153.70 T/P level and I am still flat. The Bund closed at 153.50 last night. We have support from 152.20/152.90 where I will again be a buyer with the same 151.65 stop.
Gold Rolling Contract
The weaker Dollar saw Gold rally above 1860 and I am still flat. I will now raise my buy level to 1822/1839 with a higher 1808 stop.
Silver Rolling Contract
Silver continues to struggle but the late rally saw the market close above 22.00. Today, I will raise my buy level to 21.20/21.90 with a tight 20.55 stop.
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