News and analysis

Despite the major broad market barometer on Wall Street (US500) lost more than one percentage point in the U.S. Eastern time midday on April 10, simply because of some higher-than-expected consumer price data, the shares of Delta Air Lines (DAL) jumped by 4% soon after the opening bell and lost their heat only when the core group of other stocks surrendered under the pressure of inflationary agenda. Unfortunately, the U.S. Consumer price index (CPI) added another 0.4% on a monthly basis to a 3.5% YoY, against a 3.2% in the previous month and a 3.4% of consensus growth expectations. Of course, this raised concerns of possible postponing the Fed's interest rates cuts. The FedWatch Tool on the Chicago Mercantile Exchange (CME) now shows a 95% chance of holding borrowing costs unchanged within its historically high 5.25-5.50% range in May and a 81.5% probability of the same scenario for the U.S. central bank meeting on June 12. The majority of futures traders are betting for September 18, meaning the date of the first interest rates cut. As a result, the S&P 500 futures washed up on the shore below 5,150 points after pretending to approach 5,300 only several days before. Meanwhile, Delta (DAL) pioneered first quarter earnings to the audience, and the reported numbers partially changed air travel segment sceptics’ perception. The report clearly deserves attention, as it has by far surpassed the expert pool forecasts, posting Q1 EPS (earnings per share) at $0.45 vs supposed $0.34. This is a sign of squeezing more-than-feared money from even a declining revenue of $12.6 billion, compared to $14.3 on average in the previous three quarters. The first quarter is usually an air pocket every year for the entire industry, yet Delta was able to collect 6.8% more than in Q1 2023, when it gained only $0.25 of pure income per share on an $11.8 billion of revenue. The first quarter of 2022 gave Delta a $1.23 loss in EPS on only $9.35 billion in sales. This actually marked the best ever Q1 in Delta's history.

From the outer point of view, Delta is progressing fine, so that financial improvements are evident. Besides, the company's own projected revenue for the upcoming April to June quarter is hitting records. Delta CEOs said they are waiting for "a mid-teens operating margin", with an EPS of $2.20 to $2.50 and targeting their brave EPS outlook of $6.00 to $7.00 for the full year of 2024, vs a consensus of $6.46. Free cash flow is anticipated at $3 to $4 billion, which also looks positive. A stronger recovery path of the business pushed some analyst houses, including Citigroup, to admit that Delta performance was encouraging. "These results should support Buy-rated Delta Air Lines’ shares on Wednesday morning," Citi wrote in a client note, adding that it allows the investment group to identify Delta as "its preferred US carrier." City analysts got a $55 price target on the stock, vs a $47 area reached after the intraday retracement.

At least, a breakthrough well above the $50-52 resistance for the last 12 months looks an almost inevitable scenario. It also sounds reasonable to expect at least a short-lived re-test of a pre-covid all-time high at $63.44, because inflation sets new standards for share pricing in many cases.

Tron (TRX) has seen a modest rise of 0.7% this week, reaching $0.1209, with earlier gains peaking at 3.1% when the token briefly climbed to $0.1240 on Wednesday. However, much of these gains were eroded amidst broader market downturns.

In contrast to Bitcoin's 15.5% gain in March, Tron experienced a 13.0% loss during the same period, reflecting its underperformance exacerbated by regulatory pressures from the U.S. Securities and Exchange Commission (SEC). The token dipped below the $0.1200 support level, hitting $0.1098 on March 20, before partially recovering from its losses.

There are no good news for Tron. Its founder Justin Sun it trying to create some alternative news speculating around AI issues. He was also asking the U.S. Court to Dismiss SEC lawsuit.

Investors may find solace in the hope that the $0.1200 support level holds, especially if no additional pressures are exerted on the crypto market. In such a scenario, Tron could potentially stage a recovery towards the $0.1400 resistance level.

Monero (XMR) is experiencing a 4.5% rise to $136.16 this week, with a minor pullback observed after reaching $140.34, marking a 7.5% increase on Tuesday. Notably, XMR is outperforming Bitcoin (BTC), which has only seen a 1.6% increase to $70,300 per coin.

During the recent crypto market correction at the end of March, XMR managed to hold above the support level at $125.00. Now, it's aiming for $150.00 in a bid to reclaim its established uptrend since June 18, 2022. While an initial attempt was made in March, the current effort appears more promising. Additionally, the Monero network is advancing with the Fluorine Fermi update.

The $150.00 barrier is viewed as robust and formidable. Surpassing it will pose a challenge, but if achieved, ambitious targets at $225.00 and beyond could be within reach.

US inflation data that will be released on Wednesday, April 10th, would nominally form another challenge for a lasting bullish trend on Wall Street. The headline CPI (consumer price index) is expected to jump from 3.2% to 3.4% YoY in March, with core numbers (excluding volatile food and energy) slowly declining from its 4.0% pre-Christmas peaks to 3.7%, compared to 3.8% a month ago. This is widely considered as a risk factor, which could prevent Jerome Powell and his colleagues from the Federal Reserve to launch borrowing cost cuts in June. Inflation spirit goes to the forefront following much stronger-than-expected non-farm payrolls last Friday at 303,000 vs 212,000 of expert consensus, when the U3 unemployment rate amounted to 3.8% approaching an 8-month low. Yet, I believe a tight labour market and persistent price pressure is only an imaginary threat for the Wall Street mood now.

The major argument is that most investors just don't care too much of the particular timing for rate cut moves in 2024, as the proximity of the pivot point in this monetary cycle is not questioned by central bankers anymore. The FedWatch tool on CME indicates 87.3% of the market crowd are betting for one, two or even more rate cut moves even from June to September. Besides, the USD index also retreated from its April 1 highs above 105 to nearly 104, instead of trying to climb, which would be in a case of keeping "higher for longer" rate bets. Small turbulence is possible during the Wall Street flight to new historical records, but nothing more than that. The basic principles and reasons behind the current S&P 500 rally to 5,500, and probably higher, are in the psychology field, as asset portfolio holders still prefer equities rather than cash or bonds nominated in US Dollar, Euro or Chinese Renminbi. Shares of Google, Amazon, Microsoft or some other giant businesses nearly acquired the status of new money, or one may call it as an intermediary means of capital investment and further transformation to money for payment.

Analysts at Oppenheimer set their price targets for Google-parent Alphabet at $185, compared to $172 before. They raised Meta price target to a "golden probe" number of $585 from $525, citing "incorporate AI tailwinds and historical seasonality" and maintaining an Outperform rating on both stocks. Many other large and popular investment and media resources did similar moves in recent weeks. Most of them also encourage a big game in the AI "underbrush" including component manufacturers and partners of NVidia. Citigroup just reaffirmed its buy rating on Micron Technology after the Taiwan earthquake impact with a price target of $150 despite the recent growth from a $90 area to above $125. City foresees a potential deficit in dynamic random-access memory (DRAM) supply, which would be favourable for Micron even though Micron is exactly the company, which conducts 60% of its DRAM production in the suffered region of Taiwan. Micron already paused its quotes for 2Q 2024 DRAM contracts, and the move was accompanied by Micron rival SK Hynix.

It looks like any opportunity or occasion is suited for gathering arguments in favour of the rally extension. A purely technical fact that the upside direction was immediately restored after a short-lived price correction on April 4th is another evidence that bulls are in full control of the situation.