US Close – Stocks stay hot, Dollar wavers, Oil steady, Gold rally hits a wall, Crypto momentum

US stocks are rallying as Wall Street awaits a busy earnings week as well as major GDP and core PCE data later this week that should confirm Fed calls for another downshift in tightening of rates.  Corporate earnings have been coming in softer than expected and that should continue to drive recession trends, which are what is needed to get the Fed to stop tightening.

Salesforce is gaining much attention after activist Elliot Management took a multibillion-dollar stake in it.  Spotify also announced they will be cutting about 6% of its workforce, which is another tech company announcing layoffs.  This earnings season is all about cost-saving measures, which should help with margins, but does not address the growing concern with demand. 

FX

The dollar is wavering as FX traders expect inflation to go down, but still remain above the Fed’s level of 2.0%. This is a big week for earnings, but next week is bigger.  The dollar might rebound a little bit before next week’s FOMC decision.  The big wildcard for the summer is how the debt-limit showdown unfolds.  No one would be surprised if it went down to the wire, but tense market reactions are likely even though a default is not expected. 

Oil

Crude prices are wavering as the dollar stabilizes and over exhaustion from China reopening headlines.  The economy still could rollover and some energy traders are still skeptical on how quickly China’s crude demand will bounce back this quarter. 

This week will learn a lot about the crude demand outlook after we hear earnings from the airlines and Chevron.  Oil should be stuck in wait-and-see mode until we learn more about the health and outlook of the US economy. 

Gold

Gold prices are clearly hitting some resistance as Treasury yields stabilize.  Gold might consolidate here as the bond market probably won’t rally until we get to some major US GDP or core PCE data later this week. Fed rate cut bets continue to grow as recession outcomes seem more likely. 

Bitcoin

An ice age was supposed to happen given everything that went wrong for crypto this year. Months of cleaning up the FTX mess were expected, but after losing over 60% last year, Bitcoin pessimism was exhausted.  Even struggling companies like Bitcoin Miner Argo are staging a comeback and appear poised to return to the Nasdaq.  Bitcoin has tentatively found a home above the $22,500 level as risk appetite remains healthy.  A lot still could go wrong for the broader market and if that happens, it will be interesting to see how crypto reacts. 

A weaker dollar has been providing some support for Bitcoin and that trade might keep on going throughout much of the year.  Bitcoin is facing resistance around the $25,000 level and that could hold until we get past the FOMC decision.  

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