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On April 26, according to the Wall Street Journal, in order to simplify the negotiations on reciprocal tariffs, US negotiating officials plan to use a new framework developed by the Office of the United States Trade Representative (USTR), which lists major categories of negotiations, such as tariffs and quotas, non-tariff trade barriers, digital trade, product origin principles, economic security and other commercial issues. In these categories, US officials will put forward specific requirements for individual countries, but people familiar with the matter emphasized that this document may also be adjusted at any time. People familiar with the matter said that the United States initial plan is to negotiate with 18 major trading partners in turn over the next two months. The initial plan is to alternately participate in the talks with six countries per week for three weeks (six countries in the first week, another six countries in the second week, and another six countries in the third week) until the deadline of July 8. If US President Trump does not extend the 90-day suspension period he set by then, those countries that cannot reach an agreement will begin to face reciprocal tariffs.On April 26, after the United States announced additional tariffs on goods from many countries, Peruvian business people expressed concerns that the US governments extreme measures would disrupt the global trade order and may even trigger a global economic recession. Alvaro Barrenechea Chavez, vice president of the Peruvian-Chinese Chamber of Commerce, said that the negative impact of the US tariff policy has begun to emerge and hoped that the US government would rethink. Recognizing the importance of countries working together to promote development, I think this is the best way to become a true "world citizen."Market news: Musks xAI company plans to raise about US$20 billion in a financing round.Conflict situation: 1. Ukrainian top commander: Russia tried to use air strikes as a cover to increase ground attacks, but was repelled by Ukraine. 2. Ukrainian Air Force: Russia launched more than 103 drones in the night attack on Ukraine. 3. Local officials said Ukraine launched an attack in the Belgorod region of Russia, killing two people. 4. The local governor said that Russia launched an attack on the Dnipropetrovsk region of Ukraine, killing one person and injuring eight people. Peace talks: 1. Trump: ① The situation between Russia and Ukraine is gradually becoming clear, and they are "very close" to reaching an agreement. ② Ukraine is unlikely to join NATO. ③ Ukraine has not yet signed the rare earth agreement and hopes that the agreement can be signed immediately. ④ It is foreseeable that the United States will conduct commercial cooperation with Ukraine and Russia after reaching an agreement. 2. Russian Foreign Minister: Russia is "ready to reach an agreement on Ukraine." 3. Russian Presidential Assistant Ushakov: Russia and the United States will continue to maintain active dialogue. 4. Russian Presidential Assistant: Putin discussed the possibility of resuming direct negotiations between Russia and Ukraine with the US envoy. 5. The differences between the United States, Europe and Ukraine are clear. The documents show that European countries and Ukraine have raised objections to some of the US proposals to end the Russia-Ukraine conflict. 6. Market news: As part of the peace agreement, the United States asked Russian President Putin to abandon the demilitarization requirement. Other situations: 1. President of Hungarys OTP Bank: We hope to return to all business areas in Russia after the (Russia-Ukraine) conflict ends. 2. Ukrainian President Zelensky: US ground forces are not necessary for Ukraine. 3. Trump said Crimea will remain in Russia, Zelensky: Never recognize it. Agreeing with Trumps view, Crimea cannot be recovered by force. 4. NATO Secretary-General Rutte met with Trump and senior US officials to discuss defense spending, NATO summit, and the Ukrainian conflict.Rising global trade risks, overall policy uncertainty and the sustainability of U.S. debt top the list of potential risks to the U.S. financial system, according to the Federal Reserves latest financial stability report released on Friday. This is the first time the Fed has conducted a semi-annual survey on financial risks since Trump returned to the White House. 73% of respondents said that global trade risks are their biggest concern, more than double the proportion reported in November. Half of the respondents believe that overall policy uncertainty is the most worrying issue, an increase from the same period last year. The survey also found that issues related to recent market turmoil have received more attention, with 27% of respondents worried about the functioning of the U.S. Treasury market, up from 17% last fall. Foreign withdrawals from U.S. assets and the value of the dollar have also risen on the list of concerns.

Ahead of the Fed: S&P 500 Index

Cory Russell

May 06, 2022 11:14


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When the FOMC meets later today, it is largely anticipated to raise interest rates by 50 basis points. It's also likely to declare that it'll start relaxing its $9 trillion balance sheet, decreasing it by $95 billion each month, with $60 billion in Treasures and $35 billion in MBS. Matt Weller's comprehensive FOMC preview may be seen here.


If the conference's conclusion is "as predicted," the S&P 500 may not react much, since there will be no forecast adjustments on growth and inflation until the June meeting. Given how low the big cap index has fallen for the month of April, we may see a "buy the fact" scenario. The press conference, on the other hand, may hold the key to the S&P 500's next move. 


For the next three FOMC sessions, rises of 50 basis points are expected. The S&P 500 might rise if Powell becomes more dovish and implies that this is too aggressive. This would imply lower rates for longer. However, if he hints at a 75 basis point hike at one of the Fed's next meetings, as St Louis Fed President Bullard has hinted, markets may continue to fall.

The Federal Reserve: Everything You Need to Know

Since the fall of 2020, the S&P 500 index has been climbing in an ascending wedge, reaching an all-time high of 4820.2 on January 4th. On January 18th, the big cap index broke below the wedge and traded to a near-term low of 4104.1 on February 24th. The price then jumped from 4135.9 to 4636 in the second part of March. 


However, the market dropped out in April, wiping out all of those profits. The S&P 500 hit a new bottom of 4062 on May 2nd, then rebounded to form a hammer on the daily period. This suggests a rebound is on the way. Price also maintained slightly above the 50% retracement line, which crosses at 4027, from the lows of October 30th, 2020 to the highs of January 4th. In addition, the RSI is diverging from price, indicating that a rebound in the S&P 500 is possible.