Argentina: Wholesale Prices Rose Only 3.4% in April

Posted on May 17, 2024 by Ignacio Teson

The rise in wholesale prices was driven by a 3.8% increase in “domestic products,” while “imported products” showed no change.

Wholesale prices continued to decelerate in April, rising by 3.4%, well below the inflation rate for the same period (8.8%). However, they accumulated an increase of 316.5% over the past 12 months, as reported by INDEC on Friday.

The increase in wholesale prices was driven by a 3.8% rise in “domestic products,” while “imported products” showed no change.

This data suggests that inflation continues to slow down, and May could see further decreases.

On another note, the overall level of the Internal Basic Wholesale Price Index (IPIB) rose by 2.9% during the same period.

In this case, the variation is explained by a 3.1% increase in “domestic products,” partially offset by a 0.2% decrease in “imported products.”

Additionally, the overall level of the Producer Price Index (IPP) recorded an increase of 3% during the same period, driven by a 2.7% rise in “primary products” and a 3.1% increase in “manufactured products and electricity.”

In this scenario, the S&P Merval in Buenos Aires lost 1% after three consecutive gains, although it remained close to its peak level in pesos of 1,505,7118.3 units recorded last week.

The day’s declines were led by Central Puerto (-3.5%), BBVA Bank (-3.2%), and Cresud (-3.2%).

Meanwhile, Argentine stocks traded on Wall Street closed mostly lower. Additionally, dollar-denominated bonds fell by up to 1.8%, with the country’s risk premium rising by eight units to 1,261 basis points.

Chile and US Stock Markets Lose Momentum, but Dow Jones Closes Week at New Historic Highs

Posted on May 17, 2024 by Ignacio Teson

The index of 30 mega-cap companies ended Friday’s session above 40,000 points for the first time, despite most other stock indices not showing significant gains.

The Santiago and New York stock markets maintained their record levels this Friday, with little change, as investors awaited new information that could guide their positions on future Federal Reserve rate moves.

However, the Dow Jones rose 0.34% to 40,003.59 points, marking the first time the index of 30 mega-cap companies closed above 40,000 points. The S&P 500 gained a slight 0.12%, and the Nasdaq Composite closed flat, both remaining at record levels.

Chile’s S&P IPSA increased 0.11% on Friday and 0.28% for the week, closing at 6.658,98 points. Measured in dollars, the weekly gain was 3.33% due to the strong appreciation of the Chilean peso.

Following a new surge in the New York Stock Exchange (with the S&P up 1.48% for the week), Wall Street took a breather yesterday. This pause was prompted by Federal Reserve officials who tempered market enthusiasm, which had anticipated more than one interest rate cut this year.

[[SPX-graph]]

The presidents of the Cleveland, New York, and Richmond Federal Reserve banks agreed that there is still not enough confidence to consider easing credit.

While European stock markets saw moderate declines, Chinese markets closed with strong gains after Beijing announced historic stimulus measures for the real estate sector, which had shown no signs of recovery in April.

Copper Futures Surpass $5 per Pound in New Historic Closing High, Up Over 8% for the Week

Posted on May 17, 2024 by Ignacio Teson

The rapid increase in copper prices has been driven by a wave of speculative buying in the derivatives market. This sudden interest has prompted concerns among industry experts about the formation of a speculative bubble.

The frantic bets by speculative funds continue to push copper to historic highs, as reflected in the positions reported in the Commitment of Traders (COT) report by the U.S. derivatives regulator.

The results are evident: July copper futures rose 3.55% on Friday and 8.31% for the week, ending the last trading session at $5.05 per pound. This marks the highest closing price in the history of the comparable series, following an intraday record of $5.13 per pound on Wednesday. It is also the largest weekly gain since April 3, 2022.
Speculative Surge

In the very short term, what is happening—and could continue to happen on a daily basis today, next week, and in the coming weeks—is that market speculators are entering forcefully, believing that prices will keep rising. This creates a self-reinforcing cycle, leading to what is known as a speculative bubble.

Managed money traders on the Comex declared a net position of 69,225 contracts (equivalent to approximately $8.5 billion) on Tuesday, the highest since February 2021, according to a report released this Friday by the Commodity Futures Trading Commission (CFTC).
Hedge Funds on the Offensive

Notably, hedge funds betting on rising prices are making unprecedented long positions worth nearly $16.4 billion, compared to $7.9 billion declared by shorts, who are being forced to sell at a loss. This disparity highlights the aggressive bullish bets by speculative funds, which are driving the current price surge.
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The Mexican peso closed the week with a gain of more than 1%, with the dollar ending at 16.60 pesos.

Posted on May 17, 2024 by Ignacio Teson

Hopes for a Federal Reserve rate cut this year and a comment from Banxico Deputy Governor Irene Espinosa benefited the currency.

The Mexican peso ended Friday’s trading with gains, advancing for the third consecutive session. The local currency was boosted by hopes that the Federal Reserve will cut rates this year, resulting in a strong weekly improvement.

The exchange rate ended the day at 16.6044 pesos per dollar. Compared to an official rate of 16.6818 pesos yesterday, according to data from the Bank of Mexico (Banxico), this represented a gain of 7.74 cents, equivalent to 0.46%.

The dollar traded in a narrow range between a high of 16.7255 pesos and a low of 16.6000 pesos. The Dollar Index (DXY) from the Intercontinental Exchange, which measures the greenback against six major currencies, edged up 0.01% to 104.47 points.

[[USD/MXN-graph]]

This week, the peso benefited from U.S. economic data showing a higher probability of a Federal Reserve rate cut, particularly a consumer inflation figure below expectations.

Locally, the peso was supported by a comment from Banxico Deputy Governor Irene Espinosa, who stated that there is no urgency to cut the key interest rate. Next week, investors are looking forward to a local inflation report.

In this context, the currency recorded a significant weekly gain. With a close of 16.7845 pesos last Friday, the accumulated movement in favor of the peso this week was 18.01 cents, equivalent to 1.07%.

Over the weekend, we expect the exchange rate to oscillate around 16.57, considering the strength of the peso while awaiting inflation figures next week.

Highest Silver Close in 11 Yrs Above $30, Next Target at $40

Posted on May 17, 2024 by Skerdian Meta

Silver (XAG/USD) experienced a significant escalation in the upward momentum on Friday, rising over 7% and reaching an intraday high of $31.50. This strong bullish movement is being driven by several factors, including as softening USD, since Silver and Gold prices are quoted in USD, increased demand for safe haven assets in times of global uncertainty as investors often safety first during geopolitical tensions, economic uncertainty, and market volatility, which have contributed to the increased demand for Silver and Gold.

Continue reading “Highest Silver Close in 11 Yrs Above $30, Next Target at $40” →

Whale Transfers 56 Million XRP Amid Price Volatility – Will XRP Ever Recover?

Posted on May 17, 2024 by Sophia Cruz

In the middle of a challenging era in XRP, attention has once more shifted to significant whale activity surrounding the token.

Whale Transfers 56 Million XRP Amid Price Volatility – Will XRP Ever Recover?

According to on-chain data circulating within the global crypto sphere, it has been highlighted that a prominent XRP whale has recently transferred approximately 56 million coins to centralized exchanges (CEX) within the last 24 hours, sparking discussion within the crypto community.

The whale transactions, characterized by massive XRP dumps on exchanges, have triggered a wave of bearish sentiment toward XRP’s cryptographic journey.

As per on-chain insights by Whale Alert, a total of 56.01 million XRP was transferred within the last 24 hours across two transactions. Interestingly, both transactions were initiated by the same notable XRP whale, identified as …Rzn.

The first transaction involved the transfer of 29.98 million XRP to Bitso, a Mexico-based CEX. Meanwhile, the second transaction includes 26.03 million XRP being moved to Bitstamp, another CEX based in Luxembourg City.

As a result, these transactions highlighted a rise in selling pressure on the Ripple-backed token in the market, aligning with its recent price decline. Moreover, on-chain data contributed to the bearish outlook surrounding XRP.

At this time of writing, XRP is trading at $0.52, showing a 0.53% increase over the last 24 hours. XRP’s 24-hour trading volume has decreased by 5.79% to $1.12 billion, along with a slight increase in market capitalization by 0.40% to $28.80 billion. These figures further emphasize the market’s current bearish trend of the Ripple-backed token.

According to Coinglass data, there’s a continuation of the bearish trend for XRP, with the token’s open interest decreasing by 1.93% to $570.17 million. Additionally, the derivatives volume saw a decline of 5.66% to $795.95 million, indicating reduced investor interest in XRP. However, the Relative Strength Index (RSI) remained close to 47, suggesting that the asset is currently neither overbought nor oversold.

Hang Seng Index Enters Bull Market, Boosted By Key Stocks

Posted on May 17, 2024 by Sophia Cruz

The Hang Seng index has greatly recovered this year as investors seized the opportunity to buy the dip in Chinese equities. Now it finally entered a bull market, surging over 28% from its lowest point this year, and is now hovering near its highest level since August 2023.

Hang Seng Index Enters Bull Market, Boosted By Key Stocks

Aside from the Hang Seng index, the China A50 is also experiencing a strong bull market, which surged over 18% from its lowest point this year. Similarly, other popular indices such as the Shanghai and Shenzhen composites, have also seen massive gains.

For the longest time, China has become the world’s largest manufacturer, capturing significant market share in key sectors such as clean energy and electric vehicles. Companies like BYD have surpassed Tesla to become the largest EV manufacturer globally.

Today’s economic data from China captured investor attention, focusing on fixed asset investment, unemployment, retail sales, and industrial production figures.

In April, industrial production rose by 6.7% year-on-year, following a 4.5% increase in March. This exceeded economists’ forecast of a 5.5% rise. Retail sales went up by 2.3% year-on-year in April, following a 3.1% increase in March. Economists had anticipated a 3.8% rise in retail sales.

Fixed asset investment also grew by 4.2% year-on-year for the YTD, compared to a 4.5% rise in March. Economists had projected a 4.6% increase. Last month, the unemployment rate unexpectedly dropped from 5.2% to 5.0%

These economic indicators point to an improving demand environment in the manufacturing sector, aligning with recent Caixin Manufacturing PMI data.

The Caixin Manufacturing PMI increased from 51.1 in March to 51.4 in April. Last month’s survey highlighted a notable surge in overseas demand, with new orders growing at the fastest rate in nearly three and half years.

At press time, the Hang Seng Index was up by 0.50% closing at 19,474.

One Retailer’s Stock Jumped 7% and Could Go Higher Next Quarter

Posted on May 17, 2024 by Timothy St. John

On Thursday, Walmart (WMT) stock climbed by 7%, partly on the news that inflation is not as bad as expected.

The retail giant attributes its gains not to inflation, though, but to strong sales revenue and happy customers. A statement from Walmart CFO John David Rainey reported that customers come to Walmart for the value in a tight economy.

The American retailer reported $161.5 billion in sales, which is above the anticipated figure and helped boost earnings per share. Those earnings were also better than anticipated.

The company’s CEO Dog McMillon said to investors that the results the company is seeing is not solely due to inflation. He says that the company is growing and that there are more transaction counts and an increase in market share. In other words, Walmart is taking over more of the retail space across the country and drawing more customers into its stores from other retailers.

It helps that Walmart is a fully stocked grocery store as well as a conventional retailer, and their prices are famously low. The value is increasingly important to consumers who are trapped in a high inflation economy.

Walmart Stock Expected to Increase

The forecast for Walmart is strong for the next quarter. Sales from the previous quarter increased by 3.9% from last year. Sam’s Club sales increased by 4.4%, and the company expects that to all increase for the next quarter, especially with membership income up by 13%.

Walmart is an important institution in times of high inflation, and even though the US CPI report showed that inflation may be cooling, that will not be enough to cool customers on shopping at the discount retailer. More inflation data from FOMC member Waller today could move the needle on stocks and economic sentiment as well.

Walmart is also cutting hundreds of jobs in attempts to increase profit margins. Some of its employees have been asked to move to its headquarters in Arkansas.

Tesla May Move to Texas to Pay Elon Musk $56 Billion

Posted on May 17, 2024 by Timothy St. John

Back in 2018, Elon Musk promised his company Tesla that he would guide them to earn a valuation of at least $100 billion or he would not get paid.

Tesla may be moving to Texas if CEO Musk has his way.

Musk managed to raise Tesla’s profits so much that they were valued at over $1 trillion, and Musk was supposed to receive a $56 billion payout as a result. That money was to be paid to him in stock options, which grew in value as the company grew.

The state of Delaware has contested the payout, though. A Delaware judge ruled in February of this year that the stock options Musk was paid should be voided. If the stock options were allowed, then they would have increased Musk’s ownership of the company by 7%, up to 20%.

Musk has promised to leave Delaware and move the company to Texas, relocating Tesla there and establishing Texas as the state of incorporation for the electric car manufacturer.

Tesla’s board of directors would still have to vote on the decision, which would require a majority. The decision to make the move to Texas and give Musk his stock options is being championed by Tesla’s chairwoman Robyn Denholm. She says that it is in the best interests of Tesla to pay Musk the shares, because he has helped the company so much and would need a major payout to stay motivated to stick with the company and move it forward. There are concerns that if Musk does not get his way with the shares and the Texas relocation, he might leave Tesla.

How Is Tesla’s Stock Performing?

Tesla shares climbed 1.81% on Friday, and the stock has remained high since late last month when it jumped 34%. The company has had to fire a number of employees recently to help with cutting costs, and their sales outlook for 2024 is not overly optimistic.

Still, there is a lot of faith in the company and what they can do. Musk has committed to doubling down on artificial intelligence investments to help move the company forward, and his charismatic presence and unconventional ideas have kept the company in the public consciousness despite flagging sales.

This AI Stock Is in Sharp Decline after Wednesday Gains

Posted on May 17, 2024 by Timothy St. John

Cisco Systems Inc (CSCO) saw its stock climb on Wednesday by 2%, and then the stock dropped quickly on Thursday, falling 3% before trading closed out.

Cisco Systems stock is dropping rapidly.

The company makes network equipment, and they detailed their forecast for the fourth fiscal quarter for 20204. Cisco anticipates better revenue for the fourth quarter than analysts’ expectations, but those expectations were quite low already. The company has been helped recently by better supply chain operations, but that has not given the company the boost it needs to keep its stock high.

The company is bringing in more revenue thanks to companies needing cloud computing solutions and artificial intelligence software. However, Cisco’s revenue is down and has stayed down for two quarters in a row. The company is sitting on a large inventory that it cannot sell, and they are currently planning on how to get rid of the excess stock.

The company earned $1.89 billion in net revenue, which is a massive drop from where the company was last year. For the same quarter in 2023, Cisco brought in $3.21 billion.

Will Cisco’s Stock Recover?

The company expects to see some improvement in key areas, particularly in its corporate networking sector and in its core internet service. The company reported that these sectors are returning to normal.

By July, Cisco expects that many of its customers will have integrated the company’s products into their systems, and that should clear up the company’s backlog. The company said that its sales have been slow due to customers trying to figure out and install previous products they bought from Cisco.

For the next fiscal quarter for 2024, Cisco expects earnings in the range of $53.6-$53.8 billion. That is higher than their previous forecast for that quarter, and if those estimates hold true, then the company may see its stock price rise.