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Bitcoin Tumbles on Hot CPI Data, But This Analyst Stays Ultra Bullish: Here’s Why

by CoinNews April 10, 2024

written by CoinNews

The better-than-expected United States Consumer Price Index (CPI) released on April 10 is already sending shock waves through the financial market. Bitcoin and most crypto assets are trading lower, extending losses recorded on April 9, weighing negatively against optimists.

United States CPI Data Came In Hot

According to Trading Economics data on April 10, CPI, a key economic metric for gauging inflation, rose 0.4% in March, pushing the annual inflation rate to 3.5%. Notably, this surpassed economist predictions and, most importantly, dashed hopes for the United States Federal Reserve (Fed) to slash rates aggressively this year.

United States CPI data | Source: Trading Economics

However, amidst the market jitters, Matt Hougan, the CIO of Bitwise Asset Management, offered a contrarian perspective as fear permeated the Bitcoin and crypto market. In a post on X, Hougan downplayed the influence of the CPI data on Bitcoin’s long-term trajectory.

The executive argues that investors and traders should track other market factors like spot Bitcoin exchange-traded fund (ETF) inflows and rising government deficits. In Hougan’s assessment, these can strongly influence price, even lifting Bitcoin higher since they are currently aligned.

Time To Buy The Bitcoin Dip?

As such, even with the fall in BTC, the drop could offer potential buying opportunities for long-term holders. Some supporters believe the “hot” CPI data only exposes the vulnerabilities of fiat currencies. This would potentially drive investors to use Bitcoin as a hedge.

Moreover, this upbeat sentiment is backed by solid demand for gold, a store of value asset preferred by traditional finance investors. Analysts anticipate Bitcoin will follow a similar path as investors seek to protect value amid rising inflation.

Further bolstering the bullish sentiment is the possibility of a spot Bitcoin ETF launch in Hong Kong before the end of April.

The Hong Kong Securities and Futures Commission (SFC) has been assessing various applications. Leading Chinese asset managers have submitted some. If the product is approved, it could further channel more capital to BTC, boosting inflows from the United States.

Bitcoin price trending sideways on the daily chart | Source: BTCUSDT on Binance, TradingView

When writing, BTC is steady but under pressure. April 9’s losses have been confirmed. The coin might track lower if bulls fail to push prices above all-time highs of around $74,000.

Bitcoin remains in a broader bullish formation, technically moving inside a rising wedge. This bullish outlook will only be invalidated if prices tank below $61,500 in the sessions ahead.

Feature image from DALLE, chart from TradingView

Disclaimer: The article is provided for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell or hold any investments and naturally investing carries risks. You are advised to conduct your own research before making any investment decisions. Use information provided on this website entirely at your own risk.

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April 10, 2024 0 comment

Finance

Yen tumbles after report Bank of Japan to keep negative rates this month

by CoinNews December 11, 2023

written by CoinNews

The yen fell against the dollar on Monday after a report indicated the Bank of Japan was unlikely to exit its negative interest rate policy at the last meeting of 2023.

Central bank officials are waiting for more proof of sustained inflation and signs of wage growth before halting that decades-long policy, sources familiar with the matter told Bloomberg News. They said a final decision will be made by officials after a review of data between now and that meeting date, including financial market conditions and the quarterly tankan survey of economic conditions due Wednesday.

That may mean the Dec. 19 meeting will disappoint those who have been recently making bets that a big shift in policy was coming soon. Those expectations of a shift in policy were driven by comments last week by Bank of Japan Gov. Kazuo Ueda and Deputy Governor Ryozo Himino. Their remarks sent the yen and Japan bond yields soaring last Thursday.

But Monday saw the dollar
USDJPY
climb 0.7% against the yen to 146.10 yen. The 10-year Japanese government bond
,
though, rose 6 basis points to 0.78%. The Nikkei 225 index
,
one of 2023’s best global stock exchange performers with a rise of 25%, gained 1.5%.

Ahead of the Bank of Japan decision, the Federal Reserve, the Bank of England and the European Central Bank will all hold their last meetings of the year this week.

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December 11, 2023 0 comment

Finance

Dow tumbles 500 points as Treasury yields surge and investors focus on jobs data

by CoinNews October 3, 2023

written by CoinNews

The stock-market selloff deepened Tuesday afternoon, after data showed the labor market remains tight, leaving room for more interest rate hikes and further upward pressure on Treasury yields.

How stocks are trading

The Dow Jones Industrial Average
DJIA
fell 500 points, or 1.5%, to 32,931.
The S&P 500
SPX
was down 70 points, or 1.6%, to 4,218.
The Nasdaq Composite
COMP
dropped 272 points, or 2%, to 13,036.

What’s driving markets

Climbing U.S. bond yields remain the prime focus of traders, with the selloff in stocks pushing the Dow into negative territory for the year.

Stocks started the week and fourth quarter on a volatile note after the 10-year Treasury yield
BX:TMUBMUSD10Y,
the global benchmark, rose above 4.8%, heading towards its highest level since Aug. 13, 2007. The 30-year yield
BX:TMUBMUSD30Y
is poised for its highest level in 16 years too, jumping above 4.94%.

“Stocks and bonds are taking it on the chin again with deteriorating liquidity conditions and stronger-than-expected economic data weighing,” according to José Torres, senior economist at Interactive Brokers.

Now investors have a new shot of strong data to handle. Job openings in August rose to 9.6 million from a revised 8.9 million in July. That tops forecasts of 8.8 million openings in August.

The newest numbers “underpinned the narrative that the labor market remained solid,” said Quincy Krosby, chief global strategist at LPL Financial. Job seekers able to negotiate higher wages are a challenge for the Federal Reserve trying to address inflation with its benchmark rate, she noted.

What’s “hovering over the market is the uncertainty as to how high we can expect rates to go,” Krosby said. The other question is how high Treasury yields go, she noted. “It is the speed at which these rates have risen that have jolted the market.”

Higher implied borrowing costs, especially when rising quickly, tend to be a drag on equities, particularly since smaller or debt-laden companies may struggle to raise financing. Moreover, rising yields lower the present value of future corporate earnings, weighing on stock-market valuations.

What could be sinking in is the realization that interest rates and yields really are going to stay higher for longer.

On Tuesday, Atlanta Fed President Raphael Bostic said there was no urgent need to change course soon. “I am not in a hurry to raise, but I am not in a hurry to reduce either,” Bostic said at a panel discussion. Bostic’s comments follow other recent comments from Fed officials showing a willingness to keep interest rates higher for longer.

Traders are seeing a roughly 30% chance of the Fed adding another 25 basis point hike at its coming meeting, according to the CME FedWatch tool.

Read also: How Treasury market upheaval is rippling through global markets in 4 charts

More labor market data is coming this week. The September ADP private-sector employment report is released Wednesday, followed on Thursday by weekly initial unemployment claims. Then, Friday sees the all-important nonfarm payrolls report for September — and investors can gauge how that fits into the next chapter for interest rates.

The stronger-than-expected JOLTS data Tuesday could be a “harbinger” of a stronger-than-expected jobs report, Krosby said. “That’s the key data release this week. The market is keenly focused on the broader labor landscape.”

Companies in focus

McCormick & Co. Inc.’s
MKC,
-8.40%
shares were off more than 8% after its third-quarter earnings. While profits met expectations, the spice and flavor market came up short in sales.
Shares of electric-vehicle startup VinFast Auto Ltd.
VFS,
-7.14%
fell 5% to $9.31 Tuesday, taking the stock well below the $22 listing price when the company made its Nasdaq debut just seven weeks ago.
Krispy Kreme Inc.’s
DNUT,
+0.32%
stock edged up 1.5% to $12.60 on Tuesday after the company said it’s exploring its strategic options for Insomnia Cookies, including a potential all-cash sale.

— Jamie Chisholm contributed.

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October 3, 2023 0 comment

Finance

Dollar General’s stock tumbles after retailer misses earnings estimates and lowers guidance

by CoinNews August 31, 2023

written by CoinNews

Dollar General Corp.’s stock tumbled 13.9% in premarket trade Thursday, after the discount retailer posted weaker-than-expected second-quarter earnings and lowered its guidance.

“While we are not satisfied with our overall financial results, we made significant progress in the second quarter improving execution in our supply chain and our stores, as well as reducing our inventory growth rate and further strengthening our price position,” Jeff Owen, Dollar General’s chief executive officer, said in a statement.

The Goodlettsville, Tenn.-based company
DG,
+1.72%
had net income of $468.8 million, or $2.13 a share, for the quarter, down from $678.0 million, or $2.98 a share, in the year-earlier period. Sales rose to $9.796 billion from $9.426 billion.

The FactSet consensus was for EPS of $2.47 and sales of $9.926 billion.

Same-store sales fell 0.1% while FactSet was expecting a 0.9% rise.

The sales increase was mostly due to positive contributions from new stores, which were partially offset by a decline in same-store sales and store closures. Same-store sales were hurt by lower traffic, partly offset by higher average transaction amount.

Owen said the company is making further investments to draw down inventory and drive growth in areas such as retail labor and expects an operating profit headwind of up to $170 million in the second half from those investments.

“Same-store sales in the second quarter of 2023 included declines in each of the home, seasonal, and apparel categories, partially offset by growth in the consumables category,” said the statement.

Gross profit as a percentage of sales was 31.4%, down from 32.3% a year ago, for a 126-basis-point decline. That was mostly due to lower inventory markups and increased shrink, markdowns and inventory damages, as well as a greater proportion of sales coming from the consumables category, which has a lower gross profit rate than other product categories.

Many retailers this earnings season have complained about the impact of shrink, which can refer to damaged goods, but more often means shoplifting, which retailers claim is being conducted by highly organized gangs.

Walmart
WMT,
+0.72%,
Target
TGT,
+0.63%,
Home Depot
HD,
+1.02%,
Nordstrom
JWN,
+0.13%
and Dollar General’s key rival Dollar Tree
DLTR,
+1.13%
have all complained this earnings season about the issue.

See: Walmart’s ‘shrink’ challenges differ from those of other retail giants, CEO says

Related: Target facing ‘unacceptable amount’ of retail theft and organized retail crime, CEO says

Dollar General lowered its guidance and said it now expects sales to be up 1.3% to 3.3%, compared with prior guidance of up 3.5% to 5.0%. It expects EPS of about $7.10 to $8.30, or a decline of 34% to 22%, compared with prior guidance for a decline of about 8% to flat growth.

It said it expects same-store sales to be down about 1% to up about 1%, compared with prior guidance of growth of 1% to 2%.

The stock has fallen 36% in the year to date, while the S&P 500
SPX,
+0.38%
has gained 17.6%.

For more, read: As concerns mount about organized retail crime, these are the products being targeted

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August 31, 2023 0 comment