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The Economic Calendar:
MONDAY: Dallas Fed Manufacturing Survey, 3-Month Bill Auction, 6-Month Bill Auction, 2-Yr Note Auction, Philip Jefferson Speaks
TUESDAY: International Trade in Goods, Retail Inventories, Wholesale Inventories, Case-Shiller Home Price Index, FHFA House Price Index, Consumer Confidence, Michael Barr Speaks, Richmond Fed Manufacturing Index, 5-Yr Note Auction, Money Supply
WEDNESDAY: MBA Mortgage Applications, Michael Barr Speaks, Pending Home Sales Index, State Street Investor Confidence Index, EIA Petroleum Status Report, Survey of Business Uncertainty, 4-Month Bill Auction, 2-Yr FRN Note Auction, 7-Yr Note Auction
THURSDAY: GDP, Jobless Claims, Corporate Profits, EIA Natural Gas Report, 4-Week Bill Auction, 8-Week Bill Auction, Susan Collins Speaks, Thomas Barkin Speaks, Fed Balance Sheet
FRIDAY: Personal Income and Outlays, Chicago PMI, Consumer Sentiment, Baker Hughes Rig Count, Farm Prices, John Williams Speaks
Futures Expiration and Rolls This Week:
There are no expiration or rolls this week
Key Events:
A volatile week on Wall Street ended with stock indexes higher despite lingering fears about the banking system’s health. For the week, the S&P 500 gained 1.4%, the Dow rose 1.2%, and the Nasdaq index climbed 1.7%.
The best-performing sectors were Utilities +3.1%, Real Estate +2.6%, and Consumer Staples +1.6%.
Deutsche Bank shares tumbled as investors looked for the next trouble spot after Credit Suisse’s forced sale to UBS. Traders are trying to determine to what extent concerns around the banking system affect credit-condition tightening.
A few key short-term levels for the S&P 500:
Upside: 4004, 4030, 4048
Downside: 3967, 3940, 3920
The FED hikes the Fed Funds rate 25 basis points and suggests only one or two small rate raises on the horizon for now.
The probability of one more rate hike in the FOMC May meeting is now at 11%, with an 88% chance of no rate change. The market predicts nearly 100 basis points in rate cuts by Jan 2024.
The market says one thing, and Fed Chair Powell says, “we do not see rate cuts this year.”
The FOMC will likely envision 25-50 more basis points of tightening over and above Wednesday’s move to drive home two points primarily:
U.S. Treasury yields current yield compared to the last newsletter:
30-Year yield 3.65% vs. 3.63%
10-Year yield 3.38% vs. 3.43%
5-Year yield 3.441% vs. 3.50%
2-Year yield 3.775% vs. 3.84%
2-10 Yield spread -0.39% vs. -0.41%
This year has been a wild ride in the oil and gas markets. We’ve seen prices plummet and soar, leaving us all confused and dizzy. But don’t worry; we have a few tricks up our sleeves to help get us out of this mess!
China is leading the charge for higher demand, with record-breaking numbers that will have us all in a frenzy. Russia also agrees to cut production by 500,000 barrels daily, which should help keep prices up.
We’re also monitoring the global central banks, which we hope will slow their interest rate hikes and weaken the dollar, as this could ultimately result in higher prices.
Finally, with geopolitical tensions in the air, we must remember the risk to supply. This is why taking the necessary precautions and getting hedged to protect ourselves from sudden price changes is essential.
With all this in mind, I still believe that triple-digit oil is within our reach – so don’t give up hope just yet!
The new canary in the coal mine is Deutsche Bank (DB). The stock came under heavy pressure Friday after the costs of insuring the bank against a credit default spiked.
Traders are monitoring the situation closely because Deutsche Bank is a leading global bank.
The bank is Germany’s largest lender, with total assets of about 1.337 trillion euros. It employs nearly 85,000 staff across 58 countries and is one of 30 global systemically important banks that regulators monitor more closely, in order to safeguard financial stability.
Although the price of Bitcoin has rebounded by nearly 70% since the beginning of the year, the crypto winter still lingers.
Since the beginning of 2023, the SEC has tried to crack down on the crypto market, charging several vital players and proposing an extension to federal custody requirements for crypto assets.
The effect of FTX’s bankruptcy continues to weigh on the space. Crypto lender Genesis filed for bankruptcy on January 20, and crypto bank Silvergate closed its doors on March 8. Signature Bank also collapsed, previously home to the crypto central payments processing platform Signet.
The latest is an SEC lawsuit against crypto leader Coinbase. The lawsuit’s outcome could determine the vitality of the crypto business in the U.S.
Geopolitically, the world is more of a mess. Biden’s foreign policies have made friends of our enemy’s enemies.
His recent shunning of Saudi Arabia has driven Saudi closer to China and made peace with their archenemy Iran. Chinese President Xi Jinping and Russian President Vladimir Putin are now in an economic and business pact that will shun trade in the U.S. dollar.
According to Treasury Secretary Yellen, the world’s reserve currency should be cherished. The above countries have different plans.
Successful traders think in terms of probabilities, not in terms of right or wrong.
Traders can use probability to help them decide when to enter and exit trades. Traders can use chance to determine the likelihood of a potential trade being successful or unsuccessful and decide whether it is worth taking the risk.
Probability can also be used to help traders identify patterns in the market and make predictions about future price movements. Finally, probability can help traders decide when to set stop-loss and take-profit levels.
