Bitcoin Prices Are Plunging: Global Week Ahead – Zacks Investment Research

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There are four big box U.S. retailer earnings reports this week.
In the Global Week Ahead, the debate on the speed of monetary policy rate increases is likely to pick up steam.

Stock traders enter the week with the Nasdaq index down -24.5% YTD, the S&P 500 down -15.6%, and Bitcoin (BTC) prices in a freefall.

I moved faster-moving financial market prices in front of macro data, in the event’s rank-order this week. They will foretell better for traders.

Here are Reuters’ five world market themes, reordered for equity traders—

(1) Crypto Prices Are Crashing

Cryptocurrency aficionados and observers alike will be watching for the fallout of a spectacular price collapse.

Bitcoin was on track on Friday for a double-digit weekly drop, and headed for a record losing streak. Other cryptocurrencies have also slid with investors shunning risk assets as central banks get aggressive on inflation.

Whether so-called stablecoins can maintain their dollar pegs as investor confidence plummets is key.

The algorithmic stablecoin TerraUSD broke its peg and has plunged to as low as 30 cents, as its complex balancing mechanism involving another free-floating token stopped working.

Others such as Tether, USD Coin and Binance USD are confident they will be spared TerraUSD’s fate because their cryptocurrencies are backed by reserves of dollar-based assets.

Those reserves may come under increasing scrutiny as investors assess whether those coins can handle a wave of redemptions.

(2) Natural Gas Flows to Europe from Russia in Peril

Pressures on Europe’s gas markets show no sign of abating.

Moscow’s sanctions against Gazprom Germania, in which its gas producer Gazprom ceded ownership, and EuRoPol GAZ SA, owner of the Polish part of the Yamal-Europe gas pipeline, have sent prices higher. A Kremlin decree from May 3rd bans Russian entities to make deals with those on the sanctions list.

This has hit flows to Europe already diminished after Ukraine declared force majeure and said it will not reopen a key gas transit route from Russia to Europe until Kyiv obtains full control over its pipeline system.

And there’s still confusion among EU gas companies over a payment scheme decreed by Moscow in March that the European Commission has said would breach EU sanctions as deadlines approach.

(3) Will the U.S. Economy See a ‘Hard’ or ‘Soft’ Landing?

The Federal Reserve is all but certain to hike interest rates by 50 basis points at upcoming meetings. Upcoming data should show whether hefty tightening will bring a hard or soft landing for the economy.

Forecasts for Tuesday’s U.S. Retail Sales data predict a +0.7% rise in April after a +0.5% monthly increase in March. Signs of how much inflation — which shows only the slightest hints of moderating — is pinching consumers may also be evident in Tuesday’s earnings reports from Walmart, Home Depot and Macy’s.

Friday’s existing home sales data could show just how quickly rising mortgage rates are cooling the housing market.

The Fed’s determination to contain inflation has fueled ‘hard landing’ worries. The S&P 500 is set for its worst year since 2008 — any signs the economy is weathering higher rates would be welcome relief.

(4) Is the Global Consumer in Trouble?

The consumer is in trouble. Soaring food and fuel prices are eroding disposable incomes and lockdown-era savings — that could have been spent on travel and shopping — are dwindling fast.

Economists predict COVID curbs will have driven a 6% slump in China’s April retail sales, almost double March falls. U.S. April retail sales are tipped to rise, but as in March, gasoline and food may account for most of the increase.

British consumer confidence slumped in March to near the lowest in nearly half a century, research firm GfK said. A cost-of-living squeeze likely deepened shoppers’ gloom in April.

No surprise global consumer discretionary shares have tumbled almost a third this year, exceeding a broader equity index fall. Investors have taken note; several say they are no longer banking on the consumer.

(5) Key Asia Macro Data Lands

A data pulse across Asia could recalibrate the outlook for regional assets.

China reported industrial output on Monday. This was pegged to probably be all glum. It was glum! China’s central bank also fixes benchmark rates on Friday. Traders see steady as the most likely outcome.

And in Australia, wages.

Top Zacks #1 or #2 Rank (STRONG BUY or BUY) Stocks

What companies (other than Energy sector ones) still see their earnings estimates move up, amidst a stock market correction? These three:

(1) Sysco (SYY Free Report) : This is a major U.S. food distributor. Shares price at $83 now, making for a market cap of $42B. I see a Zacks Value score of D, a Zacks Growth score of D and a Zacks Momentum score of C.

(2) Cadence Design Systems (CDNS Free Report) : This is a major Computer-Software company. I see a $135 share price, making for a $37.4B market cap. I see a Zacks Value score of F, a Zacks Growth score of A and a Zacks Momentum score of D.

(3) Southwest Airlines (LUV Free Report) : This U.S. airline share price is at $42 now, making for a $25B market cap. I see a Zacks Value score of C, a Zacks Growth score of A and a Zacks Momentum score of B.

Key Global Macro

Weak macro data prints — out of Mainland China — did not get the week started well.

On Monday, Mainland China’s industrial production should have been up +0.7% y/y in April, plunging from a +5.0% y/y number in March. It was down -2.9%. A miss.

China’s retail sales were down a whopping -11.1% y/y, due to COVID shutdowns.

China’s fixed asset investment (key to a communist supplier of capital) data were supposed to move up +7% y/y in April, down from +9.3% y/y. This was up +6.8%.

Canada’s housing starts data comes out for April. There is a huge housing price bubble up there. I see +246.2K y/y is the prior number.

On Tuesday, the Reserve Bank of Australia (RBA) meeting minutes come out.

The Eurozone Q1 real GDP growth rate should be +5.0% y/y, the same as last month. Q1 m/m change should be +0.2%, down from the earlier reading at +0.5%.

U.S. retail sales should be up +0.3% (ex-autos) in April, after printing +1.1% (ex-autos) in March.

ECB President LaGarde speaks and Fed Chair Powell speaks.

On Wednesday, the U.K. core CPI for April should be +6.2% y/y, identical to the USA. The prior March reading was +5.7% y/y.

The Eurozone HICP (their key CPI reading) should be up +7.5% y/y in April, identical to the March y/y reading.

Canada’s core CPI should be up +6.3% y/y in April, and being +6.7% y/y in March.

On Thursday, the Australian household unemployment rate should be 4.1% in April, after printing 4.0% in March.

U.S. existing home sales should be 5.64M in April, after 5.77M in March. Is this a sign of house market cooling?

On Friday, the People’s Bank of China (PBoC) interest rate decision lands. They might provide liquidity this time around, given the weak data prints out earlier in the week.

We get the latest update on Baker Hughes oil rigs for the USA. May 6th showed 705 rigs, up +2257 rigs from a year ago.


The four monster U.S. retailers, the ones that report Q1 earnings BMO on Tuesday and Wednesday, are what I am going to keep a close eye on.

That’s it for me.

Have a fruitful Global Week Ahead.

Warm Regards,

John Blank
Zacks Chief Equity Strategist and Economist
Southwest Airlines Co. (LUV) – free report >>
Target Corporation (TGT) – free report >>
Walmart Inc. (WMT) – free report >>
Lowe’s Companies, Inc. (LOW) – free report >>
The Home Depot, Inc. (HD) – free report >>
Sysco Corporation (SYY) – free report >>
Cadence Design Systems, Inc. (CDNS) – free report >>
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