All That Glitters is Gold
Gold stabilized around $1,980 an ounce on Friday, poised for an over 8% gain in March, as investors bet that interest rates are nearing their peak in this tightening cycle. This belief stems from easing global inflationary pressures and central banks' efforts to prevent a wider banking crisis.
Unlocking Dollar Dominance
Countries are trying to end dependence on the U.S. dollar, which would limit the ability for U.S. sanctions like those waged against Russia for its invasion of Ukraine to have an impact.
According to the State Duma Deputy Chairman, the BRICS (Brazil, Russia, Indian, China, South Africa) alliance is actively engaged in developing its own currency and is set to present its proposals at the upcoming summit in August. The transition to settlements in national currencies is the first step.
The Chinese yuan has already surpassed the euro to become the second most important currency in Brazil's foreign reserves. China and Brazil also agreed to use their own currencies for trade.
WTI crude futures traded around $75 per barrel, heading for a second consecutive weekly gain due to supply concerns and a positive demand outlook.
Saudi Arabia suggested reducing production by 500K barrels per day until the year's end amidst a fragile global oil demand recovery, influenced by recent banking turmoil.
Market participants are also closely monitoring the central bank's monetary policy direction in response to the recent banking crisis.
The energy sector rose +5% last week on the news.
Last Week's Top Events
This Weeks Recap
Wall Street closed higher on Friday, with the Dow rising by over 400 points, and the S&P 500 and Nasdaq rising by 1.4% and 1.7%, respectively.
The US core personal consumption expenditures price index came below expectations at 4.6%, suggesting that inflation may have peaked and sparking speculation that the Fed's rate-tightening cycle could end soon. However, some Fed policymakers still suggest more monetary tightening will be needed to tame inflation.
Tech shares had the top gains in the first quarter, with the Nasdaq jumping 17.6% as investors bet the Fed would pause rates hikes and cut rates by the end of the year. Investors also looked to large cap tech as safe investments amidst the turmoil in the banking sector following the collapse of Silicon Valley Bank.
Valuations in big tech are once again stretched and back at levels not seen since the zero interest rate environment of the pandemic. This is typically a setup for a sell-off or rotation away from these positions.
Former President Donald Trump was indicted by a New York grand jury on Friday. The indictment is in connection to possible activity regarding 'hush money' payments that the former President made to former porn star Stormy Daniels.
DWAC - The SPAC holding the Trump-backed social media platform - jumped +10% on the news, perhaps due to the belief the ex-President will take to the platform to stir up some controversy.
Norfolk Southern Hit with Suit
The Department of Justice filed a lawsuit late on Thursday against Norfolk Southern (NYSE:NSC) over the train derailment in East Palestine, Ohio.
Federal prosecutors accused the railroad company of violating the Clean Water Act by unlawfully polluting waterways with oil and hazardous substances from the derailed trains.
The government is seeking injunctive relief, cost recovery, and civil penalties to ensure Norfolk Southern (NSC) pays the full cost of the environmental cleanup.
Verizon Secures Government Contract
Verizon Communications secured a $2.4 billion contract to modernize the U.S. Federal Aviation Administration's (FAA) infrastructure over a potential 15-year period. Verizon Business Network Services will offer telecommunications, information management services, and other capabilities to enhance the safety and efficiency of the global aviation system.
The contract also covers network connectivity for administrative tasks such as email, payroll, and online training.
LevelFields users were alerted to the announcement under the billion dollar contracts scenario.
Alibaba Break Up
Alibaba (BABA) plans to split into six different business units with the goal of improving productivity of each individual business unit and potentially spinning out each group as a separate IPO.
The stock jumped +17% on the event over a 5-day period as investors digested the news.
CASE STUDY: Groupon +19%
Groupon, the leading destination for local services and experiences, announced Friday that they have appointed Dusan Senkypl as its interim CEO, replacing Kedar Deshpande who has stepped down.
Senkypl is a co-founder of Pale Fire Capital and will continue to serve on Groupon's Board of Directors.
The announcement was followed by a jump of +19% in GRPN's share price over the next day of trading following the LevelFields alert.
For struggling companies like Groupon, the addition of a new CEO is a major catalyst, adding oxygen to the hope things will turnaround.
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The LevelFields Team