A Bumpy Ride: Markets Set for a Red Week
It looks like the major indices are heading towards a red week, with the Dow and S&P 500 facing their worst weekly performances since March. The Nasdaq is down 0.6%, while the Dow and S&P have lost 0.3% and 0.15%, respectively.
Earnings season hasn't been too exciting, as many companies are just meeting reduced expectations. Experts like Carol Schleif from BMO Family Office think stocks might trade in a tight range for a while.
Bank Deposits Are Declining Across the Board
Banks are feeling the pinch as deposits take a huge dip. According to a recent report by Trustnodes, around $1 trillion has been withdrawn from banks in the United States. This has led to concerns among experts about the stability of the country's banking system. The reasons behind this massive withdrawal of funds are not yet clear, but some speculate that it could be due to a lack of confidence in the economy or fears of a market crash.
Regional banks have been noticing a decrease in deposits lately. It seems that people are realizing they should be earning interest on their money, which has led to them looking for better options. This shift in behavior doesn't mean the banks are losing trust, but rather that people are just moving their money around to find the best deal. Bank executives admit that competition for retail deposits is heating up, so it might be a good time to shop around and see where you can get the most out of your savings.
Even Warren Buffet got spooked. Warren Buffett's company, Berkshire Hathaway, is selling off stakes in several banks. It looks like they've reduced their holdings in JPMorgan Chase, PNC Financial, and M&T Bank. On the other hand, they've increased their stake in Bank of America. It's always interesting to see what moves big investors like Buffett are making!
Where Have All the Houses Gone? The Shortage Continues
The housing market is still facing a shortage of available homes, making it tough for people looking to buy. Sales of existing homes dropped 2.4% in March compared to February, and the number of homes sold is down 22% from March last year. Although the median sale price has decreased by about 1% compared to a year ago, it's still 40% higher than before the pandemic.
There's just not enough inventory out there, with only 2.6 months' worth of homes for sale. High mortgage costs are preventing homeowners from selling and keeping some first-time buyers from entering the market. However, this situation is benefiting homebuilders like D.R. Horton, whose profits exceeded expectations. If you're set on buying a house, new construction might be your best bet right now.
Yellen's Balancing Act: Seeking Constructive Ties Amid US-China Tensions
Treasury Secretary Janet Yellen recently talked about US-China relations, emphasizing that while tensions exist, the two countries should still work on a constructive economic relationship. The Biden administration is trying to find areas where they can collaborate practically, and Yellen mentioned that they're not trying to "decouple" the US economy from China's. They're looking to recreate some communication channels like those from the 2006-2008 period to discuss macroeconomic and financial cooperation. However, it's uncertain if China will be open to this approach since overall relations are more strained than before and China sees the US as a rival.
Dollar's Reserve Status is Slipping Faster Than Expected
Apparently, the greenback's share in global reserves declined significantly last year, partly due to countries seeking alternatives after the US imposed sanctions following Russia's invasion of Ukraine. The dollar has lost about 11% of its market share since 2016 and double that since 2008. While the dollar still represents 58% of global official reserves, smaller nations are exploring de-dollarization, and countries like China and India are trying to internationalize their currencies for trade settlement. Although the dollar's international role isn't under immediate threat, there's a possibility that the world might start avoiding it in the future. Quite an intriguing development!
The Debt Ceiling Showdown is On!
There's a brewing battle between Republicans and Democrats over raising the debt ceiling. If Congress doesn't raise it soon, the Federal government might default, which could have serious economic consequences. Speaker of the House Kevin McCarthy spoke at the New York Stock Exchange, outlining the GOP's position, which includes cutting spending and capping future spending growth. Democrats are waiting for an actual budget plan from the Republicans before starting negotiations. As the possible default date in August gets closer, expect the debt fight to become even more intense.
Gold and Silver Are Both Down for the Week
Gold is down 1.40% for the week. Silver shed only 1%.
Gold prices just fell below $2,000 an ounce It's all because US manufacturing and service sector data turned out better than expected. In April, the S&P Global Flash US manufacturing PMI data went up to 50.4, expanding for the first time since September. Service sector activity also grew, hitting a 12-month high. So while it's great news for the economy, gold prices are feeling the pinch. Keep an eye on this, who knows what other market changes it might bring.
Global silver demand just hit a record high.Global silver demand reached a record-breaking 1.24 billion ounces in 2022? According to the Silver Institute, this surge was mainly driven by three factors: industrial fabrication, physical investment, and jewelry and silverware demand. It seems that people are catching on to silver's potential in various applications, from solar panels and electronics to jewelry and investment. So, next time you're thinking about precious metals, don't forget to consider silver – it's making waves (sort of).
What’s Happening Next Week
Monday, April 24
- None scheduled
Tuesday, April 25
- 9:00 am: S&P Case-Shiller Home Price Index
- 9:00 am: Fhfa Home Price Index
- 10:00 am: New Home Sales
- 10:00 am: Consumer Confidence
Wednesday, April 26
- 8:30 am: Durable-Goods Orders
Thursday, April 27
- 8:30 am: Gdp - Q1
- 8:30 am: Initial Jobless Claims
- 10:00 am: Pending Home Sales
Friday, April 28
- 8:30 am: Pce Index
- 10:00 am: Consumer Sentiment
Other headlines this week
- Looks like Ikea's gonna be opening new stores as part of their $2.2 billion U.S. expansion plan!
- Sad news for BuzzFeed fans - they're shutting down their news division.
- Twitter's now taking away blue verification check marks from users who haven't paid for it.
- SpaceX’s Starship explodes mid-flight.
- Fox just settled with Dominion for a whopping $787 million (almost eight times what Dominion probably makes in a year).