Dell Surges After Agreeing to Cash Dividend for VMware Spinoff

Dell Technologies Inc. (DELL) shares jumped 8.5% in extended-hours trade Wednesday after the PC maker said it plans to proceed with a spinoff of its 81% stake in enterprise software firm VMware.

The deal, which both parties expect to close in the fourth quarter, will see Dell and its shareholders receive a collective one-time cash dividend of $11.5 billion to $12 billion from VMware. Management said it intends to use the proceeds from the transaction to pay down debt and position the company for an investment-grade credit rating.

“After a comprehensive review of potential strategic options, both parties determined that this transaction will simplify capital structures and create additional long-term enterprise value,” Dell said in a statement cited by CNBC.

Through Wednesday’s close, Dell stock has a market capitalization of $70 billion and trades 26.48% higher since the start of the year. Over the past 12 months, the shares have gained around 125%. Valuation wise, the stock trades at 11.39 times projected earnings, slightly above its five-year average multiple of 10.64 times.

Wall Street View

Earlier this month, Morgan Stanley analyst Katy Huberty raised the investment bank’s target on Dell to $107 from $98 while maintaining her ‘Overweight’ rating. As well as being bullish about the VMware spinoff, Huberty believes higher PC demand and exposure to the mid-market supports earnings moving forward.

Broker research elsewhere remains mixed. The stock receives 12 ‘Buy’ ratings and 9 ‘Hold’ ratings. Currently, no analysts recommend selling the shares. Twelve-month price targets range from a Street-high $110 to a low of $79. As of yesterday’s close, the shares trade at a 3% premium to the $90 median target.

Technical Outlook and Trading Tactics

Dell shares have remained in a steady uptrend over the past year, with gains accelerating in recent weeks. This may indicate that investors have baked in most of the positive news surrounding the VMware spinoff. Furthermore, the relative strength index (RSI) has made a shallower high relative to price over the last month, suggesting waning momentum from the bulls.

Active traders should think about taking a short sale if the stock stages an intraday reversal Thursday. In terms of trade management, look to buy back the shares near last month’s swing low at $84.81. This area also finds support from the 50-day simple moving average (SMA). Protect capital with a stop-loss order placed above the high of today’s price bar.

Dell Chart

For a look at today’s earnings schedule, check out our earnings calendar.

EUR Finds Support after Finalized Member State Inflation Figures

It was a busier start to the day on the Eurozone economic calendar today. Finalized March inflation figures for France, Germany, and Italy were in focus.

Inflation

Germany

In Germany, consumer prices increased by 0.5% in March, which was in line with prelim figures. In February, consumer prices had risen by 0.7%. The annual rate of inflation accelerated from 1.3% to 1.7%, which was also in line with prelim figures.

According to Destatis,

  • The prices of services were up 1.6%, with prices of goods rising by 1.9% when compared with a year earlier.
  • Energy product prices were 4.8% higher than a year earlier, with food prices up by 1.6% compared with March 2020.

France

From France, consumer prices were also on the rise, with the annual rate of inflation picking up from 0.6% to 1.1%, which was in line with prelim figures. Month-on-month, consumer prices rose by 0.6% in March.

According to Insee.fr,

  • Year-on-year, service prices ticked up from 0.8% to 1.1%, with deflationary pressures for manufactured goods softening from -0.4% to -0.2%.

Italy

In Italy, the annual rate of inflation saw a more modest uptick from 0.6% to 0.8%, which was also in line with prelim figures. Month-on-month, consumer prices increased by 0.6% in March.

Market Impact

Ahead of the inflation figures, the EUR had fallen to a pre-stat low and current day low $1.19699 before finding support. Through the morning, the EUR bounced back to strike a pre-release high $1.19780.

In response to the stats, the EUR fell to a post-stat low $1.19726 before rising to a post-stat and current day high $1.19902.

At the time of writing, the EUR was up by 0.02% to $1.19819.

Up Next

A busy U.S economic calendar, with U.S retail sales, jobless claims, and Philly FED Manufacturing figures to consider.

Appeal for Gold Bounces Up Amid Weaker Dollar

The bullion asset recorded impressive gains at the fourth trading session of the week with global investors awaiting further signals on the U.S economy as the greenback traded near its three-week lows, further boosted gold bugs in breaking above $1745 an ounce.

Historically the U.S dollar, normally moves inversely to the yellow metal, giving gold bugs enough gas to take hold of the metal’s market momentarily with appetite for the safe-haven currency diminishing day by day.

Consequently, triggering more upsides for gold prices are recent comments coming from Fed Chairman Jerome Powell that major risks include another spike in COVID-19 caseloads and perhaps resistant strains that might prove difficult to cure.

However, U.S economic recovery remains on course thanks to rising consumer optimism, as monetary officials added that the United States is on track for faster growth and better employment readings in the coming months.

Such macros might limit the precious metals, on the bias that investors will shun non-yielding investments thereby putting gold bugs on a herculean mission breaking above $1,800 price level, despite the weakening dollar. partly because investors have pushed in record levels towards the crypto-verse as the flagship crypto and other altcoins stay bullish.

Gold bulls have built a baseline around the $1730 pivot zone, suggesting that the bullion asset might stay within the current range, as the appetite for risk broadens with the greenback’s pullback and plunging Treasury yields.

That being said, the precious metal has lost much of its appeal this year compared to 2020 with price actions deteriorating in favor of gold bears rather than gold bugs, still, deep corrections of gold prices are viewed as buying opportunities.

For a look at all of today’s economic events, check out our economic calendar.

Covid-19 Economic Impact: Lasting on Government Debt, Mixed for Growth and Mostly Transitory on Unemployment

The impact of Covid-19 is structural for most countries’ public finances, varies for GDP growth – the euro area is trailing the US and Nordics – but is milder on labour markets compared with the global financial crisis, particularly in advanced economies.

Alvise Lennkh

Click here to download Scope’s report

Scope Ratings says the impact of the pandemic on global economies varies widely, reflecting differences in the severity of the health crisis, underlying economic structures and the policy response.

Many uncertainties remain before it is possible to definitively assess Covid-19’s economic impact on individual countries and the global economy: the virus continues to spread, vaccination programmes are still building momentum, and fiscal and monetary stimulus has varied in scope and effectiveness. Still, there are some initial signals of the pandemic’s impact on government balance sheets, economic recoveries and the labour market.

For 36 countries it covers, Scope compared the IMF’s updated forecasts from last week for these countries for 2024 growth, public debt and unemployment forecasts with 2019 pre-crisis levels as well as against the IMF’s forecasts for 2024 back in October 2019 – the last full IMF forecasting round before the pandemic hit.

Scope’s analysis shows that the Covid-19 shock will have a lasting impact on most sovereigns’ balance sheets.

Some sovereigns mostly unaffected, others unlikely to reverse balance-sheet damage long term

We see evidence of sovereigns whose balance sheets are mostly unaffected, such as that of Russia and Norway, those who could reverse balance sheet deterioration absent further immediate shocks, such as Greece and Cyprus, and finally, those sovereigns that are set to see public debt levels rise markedly without a likely prospect of reversal over the coming years.

The latter group of economies includes the UK, Spain, Belgium, Italy and France.

China, the US and Japan are forecast to continue displaying higher public debt levels in the coming years, but the debt trajectory is now only slightly worse compared with the adverse trajectories already forecasted two years ago.

Economies will recover output lost from crisis at different speeds

Looking at growth, the analysis shows that Ireland, China and Turkey did not experience a growth decline in 2020 while it will take Spain, Greece and the UK three years, and Italy even four years, to return to and surpass 2019 GDP levels.

The US, the Nordics, the Baltics and most central and eastern European sovereigns should see their GDP levels exceed those of 2019 this year, while most euro area sovereigns will have to wait until 2022.

Impact on the labour market likely to be comparatively mild

Contrary to the experience during the great financial crisis, the impact on the labour market is likely to be significantly milder this time around, particularly for advanced economies.

Greece and Turkey are forecast to see their unemployment rates decline by 4-5% compared with levels in 2019 while the impact for most other Scope-rated sovereigns is below 1pp, reflecting, in part, the effective use of furlough schemes reducing job loss and mitigating the crisis impact. Italy’s unemployment rate is the most adversely affected, with a forecasted rise of around 2pp by 2024 compared with the rate in 2019 while Spain’s unemployment rate is now forecast to be 2pp higher in 2024 compared to the forecast made by the IMF two years ago.

For a look at all of today’s economic events, check out our economic calendar.

Alvise Lennkh is the Deputy Head of Sovereign and Public Sector ratings at Scope Ratings GmbH.

 

AUD/USD Daily Forecast – Test Of Resistance At 0.7750

AUD/USD Video 15.04.21.

Australian Dollar Continues To Move Higher Against U.S. Dollar

AUD/USD is currently trying to settle above the resistance at 0.7750 while the U.S. dollar is losing ground against a broad basket of currencies.

The U.S. Dollar Index is currently trying to get to the test of the nearest support level at 91.50. A move below the support at 91.50 will open the way to the test of the next support at 91.30 which will be bullish for AUD/USD.

Today, Australia reported that Unemployment Rate declined from 5.8% in February to 5.6% in March compared to analyst consensus of 5.7%. Employment Change report indicated that employment increased by 70,700 in March compared to analyst consensus which called for growth of 35,000. Stronger-than-expected reports provided additional support to the Australian dollar.

Foreign exchange market traders will soon have a chance to take a look at the latest employment reports from the U.S. Analysts expect that Initial Jobless Claims declined from 744,000 to 700,000 while Continuing Jobless Claims decreased from 3.73 million to 3.7 million.

Traders will also focus on the latest Retail Sales data from the U.S. Retail Sales are projected to grow by 5.9% month-over-month in March due to the positive impact of the new round of economic stimulus.

Technical Analysis

aud usd april 15 2021

AUD/USD managed to settle above the resistance at 0.7720 and is trying to settle above the next resistance level at 0.7750.

In case this attempt is successful, AUD/USD will head towards the resistance at 0.7775. A move above this level will open the way to the test of the resistance at 0.7800. If AUD/USD manages to settle above this level, it will move towards the resistance at 0.7820.

On the support side, the previous resistance at 0.7720 will likely serve as the first support level for AUD/USD. If AUD/USD declines below this level, it will head towards the next support which is located at 0.7700. A move below the support at 0.7700 will open the way to the test of the support at the 50 EMA at 0.7680.

For a look at all of today’s economic events, check out our economic calendar.

EUR/USD Daily Forecast – Test Of Resistance At 1.1990

EUR/USD Video 15.04.21.

Euro Tries To Gain More Ground Against U.S. Dollar

EUR/USD is trying to settle above the resistance at 1.1990 while the U.S. dollar is flat against a broad basket of currencies.

The U.S. Dollar Index failed to get to the test of the nearest support level at 91.50 but remained close to this level. If the U.S. Dollar Index declines below 91.50, it will head towards the next support at 91.30 which will be bullish for EUR/USD.

Yesterday, EU reported that Euro Area Industrial Production declined by 1% month-over-month in February compared to analyst consensus which called for a decline of 1.1%. On a year-over-year basis, Industrial Production decreased by 1.6%.

Today, foreign exchange market traders will focus on the economic data from the U.S. and developments in U.S. government bond markets. Currently, Treasury yields are moving lower, which is bearish for the U.S. dollar.

It should be noted that the yield of 10-year Treasuries has failed to settle below the important support level at 1.61% but remains close to this level. If the yield of 10-year Treasuries moves below this level, U.S. dollar will find itself under more pressure.

Technical Analysis

eur usd april 15 2021

EUR/USD continues its attempts to settle above the nearest resistance level at 1.1990. This resistance level has been tested during yesterday’s trading session and proved its strength.

In case EUR/USD manages to settle above the resistance at 1.1990, it will head towards the next resistance at 1.2025. A successful test of the resistance at 1.2025 will open the way to the test of the resistance at 1.2040. If EUR/USD gets above this level, it will move towards the next resistance level at 1.2060.

On the support side, the nearest support level for EUR/USD is located at 1.1965. If EUR/USD declines below this level, it will head towards the next support at the 50 EMA at 1.1930.

A move below the 50 EMA will push EUR/USD towards the support at 1.1900. In case EUR/USD settles below this level, it will head towards the support at the 20 EMA at 1.1890.

For a look at all of today’s economic events, check out our economic calendar.

GBP/USD Daily Forecast – Resistance At 1.3780 Stays Strong

GBP/USD Video 15.04.21.

British Pound Is Mostly Flat Against U.S. Dollar

GBP/USD continues its attempts to settle above the resistance at 1.3780 while the U.S. dollar is mostly flat against a broad basket of currencies.

The U.S. Dollar Index did not manage to get to the test of the support at 91.50 and rebounded closer to the resistance at the 50 EMA at 91.80. In case the U.S. Dollar Index manages to get back above the 50 EMA, it will head towards the resistance at the 92 level which will be bearish for GBP/USD.

Today, foreign exchange market traders will focus on the economic data from the U.S. Initial Jobless Claims report is expected to indicate that 700,000 Americans filed for unemployment benefits in a week. Continuing Jobless Claims are projected to decline from 3.73 million to 3.7 million.

Retail Sales report is expected to show that Retail Sales increased by 5.9% month-over-month in March after declining by 3% in February. The report may have a material impact on the dynamics of the U.S. dollar as it will show how U.S. consumers reacted to the new round of economic stimulus. Analysts also expect that Industrial Production increased by 2.8% month-over-month in March while Manufacturing Production grew by 4%.

Technical Analysis

gbp usd april 15 2021

GBP/USD has recently made another attempt to settle above the resistance at 1.3780 but failed to develop sufficient upside momentum and pulled back. The nearest support level for GBP/USD is located at 1.3745.

In case GBP/USD declines below this level, it will move towards the next support at 1.3710. A successful test of the support at 1.3710 will open the way to the test of the support at 1.3665.

On the upside, GBP/USD needs to settle above the resistance at 1.3780 to continue its rebound. If GBP/USD manages to settle above 1.3780, it will head towards the 50 EMA at 1.3800.

A successful test of the 50 EMA level will push GBP/USD towards the resistance at 1.3835. If GBP/USD moves above the 50 EMA, it will head towards the next resistance at 1.3865.

For a look at all of today’s economic events, check out our economic calendar.

Natural Gas Price Prediction – Prices Whipsaw and Fall as Demand Drops

Natural Gas prices moved lower on Wednesday, whipsawing and closing near the session lows.  This comes ahead of Thursday’s inventory report from the Department of Energy. Expectations are for a 50 Bcf build-in stockpiles according to survey provider Estimize. The weather is expected to be colder than normal throughout most of the midwest for the next 6-10 days. There is snow expected in the mountains which should increase heating demand.

Technical Analysis

Natural Gas prices closed on the session lows after making a higher high which is a sign of rejection. Support is seen near the 10-day moving average at 2,56. Resistance is seen near the 50-day moving average at 2.73. Medium-term momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram is printing in positive territory with an upward sloping trajectory which points to higher prices.

Demand Falls

Demand for U.S. natural gas fell in all sectors except for deliveries to LNG facilities. According to the EIA total U.S. consumption of natural gas fell by 2.0% compared with the previous report week. Natural gas consumed for power generation declined by 4.0% week over week. Industrial sector consumption decreased slightly by 0.6% week over week. In the residential and commercial sectors, consumption declined by 1.2% as a result of mild temperatures.

Natural Gas Price Fundamental Daily Forecast – Underpinned by Cooler Forecasts, Capped Ahead of EIA Report

Natural gas futures are slightly higher late in the session on Wednesday, but well off their intraday high. The market is holding support, but the early rally fell short of the last main top at $2.688. A trade through this level will change the main trend to up.

The market continues to be underpinned by weather forecasts calling for cooler temperatures and high liquefied natural gas (LNG) export volumes, but gains are likely being capped due to general uncertainty ahead of Thursday’s U.S. Energy Information Administration (EIA) storage report.

At 16:36 GMT, June natural gas futures are trading $2.630, up $0.011 or +0.42%.

Bespoke Weather Services Outlook

Colder trends over the previous 24-hours from both the American and European models added 10-12 gas-weighted degree days (GWDD) to the forecast over the next two weeks, Bespoke Weather Services said early Wednesday and Natural Gas Intelligence (NGI) reported.

The colder changes resulted from models showing “more chill in the Midwest and East over the next couple weeks,” the firm said. “…It remains difficult for weather to move the needle much at this time of year, but double-digit GWDD changes in a 24-hour period are noteworthy…We continue to look for a warming trend around the end of the month into early May, though nothing yet that leads us to believe we see a big early-season spike” in cooling degree days.

Maxar Weather Desk Outlook

Maxar’s Weather Desk made cooler changes to its updated forecast Wednesday for the six to 10 day period, starting Monday and continuing through April 23. The most notable shifts occurred in the Rockies and Midwest, according to the forecaster.

“High pressure, which has Canada origins, will carry a round of much below normal temperatures in these regions from early to mid-period,’ Maxar said. “Below normal temperatures are common in the Mid-Continent, with the exceptions being Texas late in the period. Texas moderates closer to normal on days nine and 10 along and in advance of low pressure.”

Further out in the 11-15 day time frame, from April 24-28, Maxar said its forecast “remains of lower than usual confidence for the lead time, with uncertainty pertaining to west Pacific Tropical Storm Surigae.”

Maxar’s latest forecast for the 11-15 period as of early Wednesday showed above normal temperatures over the Southwest and normal temperatures for the East Coast.

Daily Forecast

The price action suggests the futures market has already priced in the shift toward cooler temperatures into the latter half of the month. Therefore, we’re not looking for too much more upside pressure unless the cold extends into late April and early May.

For a look at all of today’s economic events, check out our economic calendar.

USD/CAD Daily Forecast – Another Test Of Support At 1.2525

USD/CAD Video 14.04.21.

U.S. Dollar Is Losing Ground Against Canadian Dollar

USD/CAD is currently trying to settle below the support at 1.2525 while the U.S. dollar is losing ground against a broad basket of currencies.

The U.S. Dollar Index managed to settle below the 50 EMA at 91.80 and is moving towards the support at 91.50. In case the U.S. Dollar Index manages to get to the test of this level, USD/CAD will find itself under more pressure.

Today, foreign exchange market traders followed the developments in commodity markets which moved higher and provided support to commodity-related currencies like Canadian dollar.

WTI oil gained strong upside momentum after Iran stated that it would enrich uranium up to 60% purity because of the recent attack on its nuclear facility. Currently, WTI oil is trying to settle above the $63 level. If this attempt is successful, Canadian dollar may get more support.

Meanwhile, Treasury yields moved higher, providing some support to the U.S. dollar. However, this support was not sufficient enough to offset the impact of strong commodity markets so USD/CAD moved lower.

Technical Analysis

usd cad april 14 2021

USD to CAD managed to get below the support at 1.2550 and is trying to settle below the next support level which is located at 1.2525. This support level has been tested several times in recent trading sessions and proved its strength.

In case USD to CAD declines below the support at 1.2525, it will gain downside momentum and head towards the next support level at 1.2500. RSI is in the moderate territory so there is plenty of room to gain downside momentum in case the right catalysts emerge.

If USD to CAD settles below the support at 1.2500, it will move towards the next support at 1.2470. A successful test of the support at 1.2470 will open the way to the test of the support at 1.2450.

On the upside, the previous support at 1.2550 will likely serve as the first resistance level for USD to CAD. A move above this level will lead to a test of the resistance at the 20 EMA at 1.2560. If USD to CAD gets above the 20 EMA, it will move towards the next resistance which is located near the 50 EMA at 1.2590.

For a look at all of today’s economic events, check out our economic calendar.

Oil Price Fundamental Daily Forecast – Prices Surge as Crude Inventories Plunge Amid Jump in Refining Activity

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading higher on Wednesday following the release of a government report that showed a bigger-than-expected drawdown in crude supplies. The market was supported earlier in the session as OPEC upwardly revised its demand forecasts and better-than-expected news from the American Petroleum Institute (API) late Tuesday.

At 16:00 GMT, June WTI crude oil is trading $62.98, up $2.74 or +4.55% and June Brent crude oil is at $66.36, up $2.69 or +4.22%.

US Energy Information Administration Weekly Inventories Report

U.S. crude oil stockpiles dropped more than expected as refiners increased activity heading into the summer driving season, the Energy Information Administration (EIA) said on Wednesday.

Crude inventories fell by 5.9 million barrels in the week to April 9 to 492.4 million barrels, compared with analysts’ expectations in a Reuters poll for a 2.9 million-barrel drop.

U.S. gasoline stocks rose 309,000 barrels in the week to 234.9 million barrels, less than analysts’ expectations for a 786,000-barrel rise.

Distillate stockpiles, which include diesel and heating oil, fell by 2.1 million barrels versus forecasts for a 971,000-barrel rise, the EIA data showed.

Refinery utilization rates rose by 1 percentage point to 85% of overall capacity. That is the highest since March of last year, just before the coronavirus pandemic caused refiners to severely restrict processing activities as demand dove.

Net U.S. crude imports rose last week by 443,000 barrels per day. Crude stocks at the Cushing, Oklahoma, delivery hub rose by 346,000 barrels in the last week, the EIA said.

Demand Predictions Move to Forefront

The International Energy Agency (IEA) predicted global oil demand and supply were set to rebalance in the second half of the year and that producers may then need to pump an additional 2 million barrels per day (bpd) to meet the expected demand.

Similarly, the Organization of the Petroleum Exporting Countries (OPEC) on Tuesday raised its global demand forecast by 70,000 bpd from last month’s forecast and now expects global demand to rise by 5.95 million bpd in 2021.

Daily Forecast

The strong demand forecasts are likely to overcome the gradual increases in output by OPEC and its allies. So prices are likely to remain underpinned over the near-term.

Additionally, a weaker U.S. Dollar should continue to be supportive for prices since it tends to increase foreign demand for the dollar-denominated commodity.

For a look at all of today’s economic events, check out our economic calendar.

Why Shares Of Goldman Sachs Are Up By 5% Today?

Goldman Sachs Video 14.04.21.

Goldman Sachs Stock Moves Higher After Strong Quarterly Report

Shares of Goldman Sachs gained strong upside momentum after the company released its quarterly report. The company reported revenue of $17.7 billion and GAAP earnings of $18.60 per share, easily beating analyst estimates on both earnings and revenue. Goldman Sachs declared a quarterly dividend of $1.25 per share, in line with the previous dividend.

The company noted that its investment banking segment generated record quarterly net revenues of $3.77 billion, and the firm retained its first position in worlwide announced and completed mergers and acquisitions. Other business segments also performed well.

The unprecendented support provided by the world central banks boosted capital markets and deal activity which was bullish for Goldman Sachs. Reports from other financial companies that were published today were also strong so it’s an industry-wide trend.

What’s Next For Goldman Sachs?

Shares of Goldman Sachs reached all-time high levels back in March 2021 at $356.85. At this point, it looks that the stock has good chances to get to the test of this level.

Analysts expect that Goldman Sachs will report earnings of $33.06 per share in 2021 and $33.71 per share in 2022, so the stock is trading at just 10 forward P/E which is cheap in today’s market environment. It should be noted that earnings estimates have been steadily moving higher in recent months, and analysts will likely increase them after the strong quarterly report.

The recent pullback in Treasury yields has put some pressure on financial stocks, but the solid quarterly performance should help Goldman Sachs gain more upside momentum. In addition, the risk of higher inflation (and higher yields) is real, which is bullish for the financial sector. Meanwhile, shares of Goldman Sachs look ready to test the recent highs as the company’s quarterly performance was strong while its valuation remains attractive.

For a look at all of today’s economic events, check out our economic calendar.

Silver Price Daily Forecast – Silver Is Losing Ground As Treasury Yields Rebound

Silver Video 14.04.21.

Silver Pulls Back After Yesterday’s Upside Move

Silver faced resistance near $25.55 and pulled back while the U.S. dollar remained under pressure against a broad basket of currencies.

The U.S. Dollar Index managed to settle below the support at the 50 EMA at 91.80 and is trying to develop additional downside momentum. In case this attempt is successful, the U.S. Dollar Index will head towards the next support at 91.50 which will be bullish for silver and gold price today. Weak dollar is bullish for precious metals as it makes them cheaper for buyers who have other currencies.

Gold pulled back towards the nearest support level at the 20 EMA at $1735. This level has been tested several times in recent trading sessions and proved its strength. In case gold declines below the 20 EMA, it will head towards $1720 which will be bearish for silver.

It should be noted that Treasury yields are rebounding after yesterday’s downside move, which is a bearish catalyst for precious metals.

Meanwhile, gold/silver ratio is testing the support at the 50 EMA at 68.60. If gold/silver ratio settles below the 50 EMA, it will gain downside momentum which will be bullish for silver.

Technical Analysis

silver april 14 2021

Silver did not manage to settle above the resistance at $25.55 and declined towards the nearest support level at the 20 EMA at $25.30. The next support level is located at $25.20, so silver will likely get material support in the $25.20 – $25.30 area.

If silver settles below the support at $25.20, it will head towards the next support level at $25.00. A successful test of this support level will open the way to the test of the next support at $24.70.

On the upside, the nearest resistance level for silver is located at $25.55. If silver gets above this level, it will get to the test of the 50 EMA at $25.65. A move above the 50 EMA will push silver towards the resistance at $25.85. If silver manages to settle above this level, it will move towards the $26.25 – $26.30 resistance area.

For a look at all of today’s economic events, check out our economic calendar.

Wells Fargo Q1 Earnings Blow Past Estimates on Release of Loan Loss Reserves; Target Price $47

San Francisco, California-based multinational financial services company Wells Fargo reported better-than-expected earnings in the first quarter, largely driven by the release of $1.6 billion in its reserves for credit losses.

The fourth-largest lender in the U.S. reported adjusted earnings per share $1.05, beating analysts’ expectations of $0.69 per share. With $18.06 billion in revenue, Wells Fargo surpassed Wall Street’s consensus estimates of $17.5 billion.

“Our results for the quarter, which included a $1.6 billion pre-tax reduction in the allowance for credit losses, reflected an improving U.S. economy, continued focus on our strategic priorities, and ongoing support for our customers and our communities. Charge-offs are at historic lows and we are making changes to improve our operations and efficiency, but low-interest rates and tepid loan demand continued to be a headwind for us in the quarter,” said Chief Executive Officer Charlie Scharf.

Wells Fargo shares, which slumped more than 40% in 2020, rebounded over 31% so far this year.

Wells Fargo Stock Price Forecast

Sixteen analysts who offered stock ratings for Wells Fargo in the last three months forecast the average price in 12 months of $39.64 with a high forecast of $47.00 and a low forecast of $32.00.

The average price target represents a -0.38% decrease from the last price of $39.79. Of those 16 analysts, nine rated “Buy”, seven rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $47 with a high of $67 under a bull scenario and $21 under the worst-case scenario. The firm gave an “Overweight” rating on the financial services company’s stock.

Several other analysts have also updated their stock outlook. BofA raised the price objective to $44 from $43. Wells Fargo & Company had its price target lifted by Barclays to $42 from $36. They currently have an equal weight rating on the financial services provider’s stock. Seaport Global Securities raised to a buy rating from a neutral and set a $42 target price. Oppenheimer reaffirmed a hold rating on shares.

Analyst Comments

Wells Fargo (WFC) appears to be beginning to take action to restructure its business mix as it works to exit the Fed consent order/asset cap and reduce its expense base. While uncertainty remains around the impact of business exits and timing of consent order/asset cap exit, we believe risk more than accounted for in the stock at 9x our 2022e EPS,” noted Betsy Graseck, equity analyst at Morgan Stanley.

WFC benefit to EPS from rising long end rates is the highest in the group, with each ~50bps increase in the 10yr driving ~4% to NII and as much as ~8% to EPS. We model WFC driving their expense ratio down to 64% by 2023 on reduced risk and compliance spend, operational efficiencies, and branch optimization. Lower expense ratio possible.”

Check out FX Empire’s earnings calendar

Price of Gold Fundamental Daily Forecast – Use Yields as Your Trading Guide, Not Inflation Expectations

Gold futures are inching lower on Wednesday shortly after the regular session opening after an attempt to continue yesterday’s strong rebound rally fizzled due to the lack of fresh buyers. On Tuesday, gold prices rose after short-sellers were caught on the wrong side of the market following the release of the U.S. consumer inflation report.

Although the report indicated that inflation grew more than expected, the reaction by Treasury bond traders surprised the market, suggesting the report had already been baked into the market.

In my opinion, gold rose, not because of higher inflation, after all, investors also had high expectations for inflation, but because Treasury yields fell, dragging down the U.S. Dollar. And we all know that gold is a dollar-denominated asset and tends to rally when the gold market weakens.

Today, yields are moving higher and the U.S. Dollar is flat. These two factors are weighing on gold prices.

At 12:56 GMT, June Comex gold is trading $1745.40, down $2.20 or -0.13%.

Treasury Yields Recovering

U.S. Treasury yields are up on Wednesday, following a slightly higher-than-expected inflation reading the previous session. The move suggests that Tuesday’s drop in yields may have been a false reaction, or a “buy the rumor, sell the fact” move. If so then, gold traders may have been caught in a “bull trap”.

In recapping Tuesday’s main event, the Labor Department reported that the consumer price index, a core measure of inflation, rose 0.6% in March on the previous month. However, consumer prices jumped 2.6% on the same period last year, the highest year-on-year gain since August 2018 and much higher than the 1.7% growth reported in February.

Daily Forecast

Later today, volume and volatility could pick up as Federal Reserve Chairman Jerome Powell is set to discuss the economic recovery from the pandemic at 16:00 GMT at The Economic Club of Washington.

Fed Chair Richard Clarida is also slated to talk about the central bank’s new framework and outcome-based forward guidance at 19:45 GMT at the Shadow Open Market Committee meeting.

Gold may have risen following the release of the CPI data, but it was not because of concerns over inflation. Expectations of higher inflation have been driving yields higher for months and gold prices have been falling.

So trade the yields, don’t trade the reports.

For a look at all of today’s economic events, check out our economic calendar.

Wells Fargo Posts Strong First Quarter Earnings

Wells Fargo and Co. (WFC) is ticking higher in Wednesday’s pre-market after beating Q1 2021 top and bottom line estimates by wide margins. America’s third largest bank posted a profit of $1.05 per-share, $0.40 better than expectations, while revenue rose  just 2.0% year-over-year to $18.06 billion, beating consensus by $600 million. Credit loss provisions decreased by $5.1 billion, underpinned by “continued improvements in the economic environment.”

Waiting on Fed Approvals

The bank is overhauling its risk management and governance as part of a Fed-guided plan to lift asset caps, which in turn will improve shareholder benefits and allow greater risk taking. It’s now expected that temporary restrictions on bank holding company dividends and share repurchases put into place at the start of the pandemic will end for most firms on June 30. Wells is scrambling to get required policies in place ahead of final approvals later this quarter.

Credit Suisse analyst Susan Roth Katzke summed up improved sentiment recently, noting, “We asked for targets and supporting disclosure to increase clarity on the path to improved returns; both were delivered with fourth quarter results. To be sure, the path forward has its obstacles and revenue growth remains a challenge, but the combination of evident progress, incremental investment, excess capital, and the inherent franchise opportunity reduce the downside risk and render the aspiration of a 15% ROTE achievable, in time”.

Wall Street and Technical Outlook

Wall Street consensus now stands at an ‘Overweight’ rating based upon 14 ‘Buy’, 3 ‘Overweight’, and 10 ‘Hold’ recommendations. No analysts are recommending that shareholders close positions. Price targets currently range from a low of $34 to a Street-high $65 while the stock is set to open Wednesday’s session about $3 below the median $43 target. While modest upside is possible with this placement, prolific gains many have to wait for the Fed’s OK on dividends and buybacks.

Wells Fargo underperformed its rivals after 2016’s disclosure it created millions of fraudulent savings and checking accounts. The stock posted an all-time high in January 2018 and turned sharply lower through 2019 and into 2020 when the bottom dropped out following the Wuhan outbreak. The recovery wave since October has stalled at the .618 Fibonacci retracement of the selloff that began in December 2019, generating much weaker gains than bank indices and commercial rivals that are now trading at multiyear and all-time highs.

For a look at all of today’s economic events, check out our economic calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication. 

Daily Gold News: Wednesday, Apr. 14 – Gold’s Consolidation Despite Rallying Stocks, Cryptos

The gold futures contract gained 0.86% on Tuesday, as it fluctuated within a short-term consolidation despite rallying stock market, cryptocurrencies. The market has bounced from the support level marked by March 8 local low of $1,763.30. In early March yellow metal’s price was the lowest since last year’s June. Today gold is trading along yesterday’s daily close, as we can see on the daily chart (the chart includes today’s intraday data):

Gold is 0.2% lower this morning, as it is trading within a relatively small daily range. What about the other precious metals? Silver is 0.04% higher, platinum is 1.9% higher and palladium is 0.2% lower today. So precious metals are mixed this morning.

Yesterday’s CPI release has been slightly higher than expected at +0.6%. Today the markets will be waiting for the Fed Chair Powell speech at 12:00 p.m.

Below you will find our Gold, Silver, and Mining Stocks economic news schedule for the next two trading days:

Wednesday, April 14

  • 10:00 a.m. Eurozone – ECB President Lagarde Speech
  • 12:00 p.m. U.S. – Fed Chair Powell Speech
  • 2:00 p.m. U.S. – Beige Book
  • 2:30 p.m. U.S. – FOMC Member Williams Speech
  • 3:45 p.m. U.S. – FOMC Member Clarida Speech
  • 4:00 p.m. U.S. – FOMC Member Bostic Speech
  • 9:30 p.m. Australia – Employment Change, Unemployment Rate

Thursday, April 15

  • 8:30 a.m. U.S. – Retail Sales m/m, Core Retail Sales m/m , Philly Fed Manufacturing Index, Unemployment Claims
  • 9:15 a.m. U.S. – Industrial Production m/m, Capacity Utilization Rate
  • 10:00 a.m. U.S. – Business Inventories m/m, NAHB Housing Market Index
  • 11:30 a.m. U.S. – FOMC Member Bostic Speech
  • 2:00 p.m. U.S. – FOMC Member Daly Speech
  • 10:00 p.m. China – GDP q/y

For a look at all of today’s economic events, check out our economic calendar.

Paul Rejczak
Stock Selection Strategist
Sunshine Profits: Analysis. Care. Profits.

* * * * *

Disclaimer

All essays, research and information found above represent analyses and opinions of Paul Rejczak and Sunshine Profits’ associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Paul Rejczak and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Rejczak is not a Registered Securities Advisor. By reading Paul Rejczak’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Paul Rejczak, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

 

GBP/USD Analysis, These Charts Suggest That Pound Is Bullish

Pound gains as the US dollar shrinks on fears of an inflation hike. While the economic data from the rest of the world is considered positive, investors watch the economic data from the US closely as positive data, growing debt, surging inflation alarm investors on interest rate change by the FED.

Despite the lower GDP announced yesterday, higher than expected manufacturing production gives confidence on the economic recovery of the UK. New Coronavirus cases in the UK sank amid several harsh measures taken by the Government, the average number of daily new Covid-19 cases reached August 2020’s lows, while the daily new cases in the US grew and vaccines were questioned for their effectiveness.

Source: Worldometers.info

With the Covid-19 becoming less weighted, the UK can now completely focus on the full recovery.

GBP/USD daily chart suggests that the British pound could enter into another bullish cycle soon as the pair hits the lower threshold of the ascending parallel channel.

GBP/USD quote on Overbit

Both indicators RSI and MACD are bullish on a daily chart and the pair has a strong support from MA100.

Double bottom pattern on the 4H GBP/USD chart also suggests that the pair should continue the uptrend.

GBP/USD quote on Overbit

The first resistance to test lies at £1.38660 which is a decisive level where a local dynamic resistance is located. If the resistance withholds, GBP may retrace to £1.36550, though if GBP is able to break the £1.38660, we might witness another bullish run and tests of resistances at £1.39885 and £1.41780.

Bullish continuation of the Pound will be supported by a weaker Dollar. Not only the inflation hikes but the growing tension between the US and China may weaken the US Dollar Index.

 

Crude Oil Price Update – Set Up for Short-Term Test of $62.29 – $63.47 Retracement Zone

U.S. West Texas Intermediate crude oil futures are trading higher on Wednesday shortly before the regular session opening. The rally is being fueled by the news that OPEC raised its outlook for oil demand and an industry report that showed U.S. inventories declined more than expected. Despite the potentially bullish news, some traders feel gains could be limited by COVID-related demand worries and rising supplies.

At 09:38 GMT, June WTI crude oil futures are trading $61.31, up $1.07 or +1.78%.

A report released late Tuesday by the American Petroleum Institute (API) showed crude stocks fell by 3.6 million barrels in the week ended April 9, compared with estimates for a decline of about 2.9 million barrels from analysts polled by Reuters.

Daily June WTI Crude Oil

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $66.15 will change the main trend to up. A move through $57.29 will signal a resumption of the downtrend.

The minor trend is also down. The minor trend changes to up on a move through $61.75. This will shift momentum to the upside. Taking out the next minor top at $62.22 will reaffirm the minor trend.

On the downside, the nearest support is a 50% level at $59.75, followed by the main retracement zone at $59.17 to $57.25. This zone is controlling the near-term direction of the market.

The first short-term range is $66.15 to $57.29. Its 50% level comes in at $61.72.

The second short-term range is $67.29 to $57.29. Its retracement zone at $62.29 to $63.47 is the primary upside target. Since the trend is down, sellers could come in on a test of this area. They will be trying to form a potentially bearish secondary lower top.

Daily Swing Chart Technical Forecast

The early upside momentum suggests the market is headed into the 50% level at $61.72. The direction the rest of the session will be determined by trader reaction to this level.

Bullish Scenario

A sustained move over $61.72 will indicate the presence of buyers. If this move creates enough upside momentum then look for the buying to possibly extend over the minor tops at $61.75 and $62.22 and the 50% level at $62.29. The latter is a potential trigger point for an acceleration into $63.47.

Bearish Scenario

A sustained move under $61.72 will indicate the buying is lightening up and the selling may be getting stronger. If this creates enough downside momentum then look for the selling to possibly extend into a pair of 50% levels at $59.75 and $59.17.

For a look at all of today’s economic events, check out our economic calendar.

An Anticipated Fall in Eurozone Industrial Production Weighs on the EUR

It was a busier start to the day on the Eurozone economic calendar today.

February industrial production figures for the Eurozone and finalized inflation figures from Spain were in focus.

Industrial Production

In February, industrial production across the Eurozone fell by 1.0%, reversing a 0.8% increase from January. Economists had forecast a 1.1% fall.

According to Eurostat,

  • Production of capital goods fell by 1.9%, energy by 1.2%, durable consumer goods by 1.1%, and intermediate goods by 0.7%.
  • Non-durable consumer goods production fell by a more modest 0.1% in the month.
  • By member state, France (-4.8%), Malta (-3.8%), and Greece (-2.5%) registered the largest monthly declines.
  • Ireland recorded the largest increase, rising by 4.2% in February.

Compared with February 2020, industrial production was down by 1.6%. In January, production had been up by 0.1% year-on-year.

  • The production of non-durable consumer goods slid by 4.3% when compared with February 2020.
  • Capital goods production (-2.2%) and energy production (-1.5%) were also a drag on the headline number, year-on-year.
  • While the production of intermediate goods slipped by 0.1%, the production of durable consumer goods rose by 0.7%.
  • Malta (-10.9%), Estonia (-8.9%), and France (-6.4%) registered the largest decreases when compared with February 2020.
  • By contrast, Ireland (+41.4%) and Lithuania (+9.7%) registered the largest increases year-on-year.

Inflation

On the inflation front, Spain’s annual rate of inflation accelerated to 1.3% in March, which was in line with prelim figures. In February, inflation had stalled.

The Harmonized Index for Consumer Prices increased by 1.2% in March, which was also in line with prelim figures. In February, the Index had fallen by 0.1%.

Market Impact

Ahead of industrial production figures, the EUR had fallen to a pre-stat low and current day low$1.1947 before finding support. Through the morning, the EUR bounced back to strike a pre-release high and current day high $1.19741.

In response to the industrial production figures, the EUR rose to a post-stat high $1.19697 before falling to a post-stat low $1.19631.

At the time of writing, the EUR was up by 0.13% to $1.19642.

EURUSD 140421 Minute Chart

Up Next

ECB President Lagarde, with FED Chair Powell scheduled to speak late in the session.