(GEOPOLITICAL EVENTS TAKE CENTRE STAGE)
April 15, 2024
Hello everyone,
The calendar this week
Earnings this week will see US banks and leading streaming companies report.
Monday, April 15
8:30 a.m. Empire State Index (April)
8:30 a.m. Retail Sales (March)
10 a.m. Business Inventories (February)
10 a.m. NAHB Housing Market Index (April)
Earnings: Goldman Sachs, Charles Schwab, M&T Bank
Tuesday, April 16
8:30 a.m. Building Permits preliminary (March)
8:30 a.m. Housing Starts (March)
9:15 a.m. Capacity Utilization (March)
9:15 a.m. Industrial Production (March)
9:15 a.m. Manufacturing Production (March)
Earnings: J.B. Hunt Transport Services, United Airlines, Morgan Stanley, Johnson&Johnson, Bank of America, Bank of New York Mellon, UnitedHealth Group.
Wednesday, April 17
2:00 p.m. Fed Beige Book
Earnings: Las Vegas Sands, CSX, Discover Financial Services, Prologis, U.S. Bancorp, Citizens Financial Group
Thursday, April 18
8:30 a.m. Continuing Jobless Claims (04/06)
8:30 a.m. Initial Claims (04/13)
8:30 a.m. Philadelphia Fed Index (April)
10 a.m. Existing Home Sales (March)
Earnings: Blackstone, D.R. Horton, KeyCorp
Friday, April 19
Earnings: American Express, Procter&Gamble, Fifth Third Bancorp, Schlumberger NV, Procter & Gamble (before the bell)
April is the correction month. On Friday several catalysts came together to plunge the market down 475. Inflation fears rattled investors, who have now seen three months in a row of hot inflation reports. So, investors have had to digest the reality that rate cuts will not happen in the near term. The expectation now is for two rate cuts later in the year. And maybe even no rate cuts. Multiple signals are showing that the Fed still has a long way to go. Of course, the bright spot for the Fed is that the economy has been able to tolerate high rates, with little impact on the employment landscape or growth at the macro level, but it is doubtful that this picture has longevity as there are a few signs that cracks are starting to appear in the labour market. And this trend could escalate as we head into the second half of the year.
On Friday also it became apparent that Iran planned to attack Israel in the next couple of days. Geopolitical events may well influence the markets in the near term, and we could see some more volatility.
On Saturday, we heard that Iran launched drone attacks on Israel, and this has now escalated the long-standing tensions between these two nations. Airspace has been closed around the Middle East, and I have also heard that Qantas has canceled flights from Perth to London. Prior to the drone attack, Iran’s Revolutionary Guards seized a cargo ship in the Strait of Hormuz saying the vessel was linked to Israel. The drone attack on Israel is in retaliation for an April 1 Israeli strike on an Iranian consulate in Damascus, Syria, which killed seven members of the Islamic Revolutionary Guard Corps. This escalation in conflict has the potential to erupt into a regional war.
Biden is yet to show his hand in how he will respond. But it may involve economic, diplomatic and cyberspace tactics.
Meanwhile in Australia on Saturday, we were shocked to see the deaths of five people after a man went on a rampage with a knife in a crowded Sydney shopping centre (Westfield) in Bondi Junction. (It is now six as another person – A Chinese national who was studying in Australia has also died). Several people are in hospital with critical stab wounds. A female police officer fatally shot the attacker when he raised his knife and threatened her. Witnesses say the man would have continued his killing spree if the officer had not taken the action she did. It is still unsure whether this was terror-related.
The male victim shown above was from Pakistan and had left his home country a year ago to seek refuge from persecution. It was his first day on the job at the shopping centre as a security guard.
The lady shown to the left of the man was a first time Mother. Her nine-month-old baby was also stabbed but survived.
The young lady pictured above the man was the daughter of a millionaire businessman in Australia and was shopping for her wedding that was in a few months.
The lady at the top in the middle of the picture was an architect, and the woman to her left was an artist simply enjoying a day out.
Mass killings are very unusual in Australia. The last major attack occurred on the 28th of April 1996, when Martin Bryant killed 35 people and wounded 23 others. It was Australia’s worst mass murder and it led to stricter gun controls, notably a near-ban on all fully automatic or semiautomatic firearms. The federal government also brought in a gun-buy-back program, which resulted in the surrender of some 700,000 firearms. Gun-rights advocates criticised the new rules, but the government’s action saw gun-related deaths drop dramatically. Martin Bryant was sentenced to 35 life terms.
Volatility has returned to the market and has given investors and traders an opportunity to start making a shopping list.
Brief Market Update
S&P 500 – we are now in correction mode. We may see 5050 or even 5000.
Gold – should see a correction or consolidation. Support around $2,250
Bitcoin – corrective consolidation. Support around $59,300.
The Quite Interesting (QI) corner
Cheers,
Jacquie
