Archives of “May 3, 2022” day

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Its not clear if Alibaba’s founder Jack Ma has been arrested, but BABA shares are plunging

  
  Analysis

Bloomberg terminal story notes:

  • Chinese authorities in the city of Hangzhou, home base to Alibaba Group Holding Ltd. and Ant Group Co., have imposed”compulsory curbs” on an individual surnamed Ma, state broadcaster CCTV reported Tuesday.
  • The person,who was otherwise unidentified, was placed under the so called controls on April 25 after being accused of inciting subversion of state power and other activities that endangered national security, CCTV said in its brief report, without elaborating.

Its not clear if its Jack Ma of Alibaba. BABA shares were cut by around 9% but have since rebounded somewhat.

Former top Fed policy staffer suggests neutral rate could be 5%

  
  Analysis

The Wall Street Journal report on a paper from a “former top Fed staffer”.

  • Federal Reserve officials have time before they need to agree on what constitutes a neutral level for monetary policy
  • but neutral may well be a lot higher than central bankers currently expect
  • officials appear to see something around 2.5% as neutral, inflation expectations data suggests neutral could be much higher, like 5% if the data is accurate.

Link to the article here, it is gated though.

Morgan Stanley see “meaningful downside” for the S&P500

  
Analysis, US Market

MS on the S&P500, analysts think the index has downside to at least 3800 in the ‘near term’ and possible to 3460

  • the 200 week moving average if forward 12 month EPS start to fall on margin and/or recession concerns

MS adds note the S&P 500 real earnings yield is the most negative since the 1950s and that to them this

  • Suggests we have meaningful downside at the index level as investors figure this out

MS have been on the right side of the slide of the index so far.

spx 03 May 2022

NASDAQ index/other indices rebound higher to start the month of May NASDAQ index was down over 4.1% last Friday

  
Analysis, US Market

The major US indices looked like they may start the month of May off the way they ended the month of April – with declines across the board. The Dow industrial average is down -1.6%. The S&P was down -1.69% and the NASDAQ was down -1.07% in the New York afternoon. However, buyers entered, and erased the declines and closed nearer the high levels of the day.

At the closing bell:

  • Dow industrial average rose 84.29 points or 0.26% at 33061.49
  • S&P index rose 23.47 points or 0.57% at 4155.39
  •  NASDAQ  index rose 201.39 points or 1.63% at 12536.03
  • Russell 2000 rose 18.81 points or 1.01% at 1882.91

The Federal Reserve will meet on Wednesday and are expected to increase rates by 50 basis points.

Since their last meeting decision on March 16:

  • The DXY index is up 5.3%
  • The 10 year yield is up 83 baais points
  • The Nasdaq is down -6.65%
  • The S&P is down -4.65%

That is some headwinds for the market, but inflation remains an unknown, housing continues have supply/demand imbalances (although getting better) and the Fed is behind the curve in getting rates to neutral (2% to 2.5%).

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