The results of the studies all came to the conclusion that entry or market timing is not critically as important as exit. Success and failure of one’s trade depended more on when to sell. Those who made the studies also claimed that taking a position in the market can be as good as anytime, like by random entry. This was possible due to the mean-revertive character of the market.

Mean reversion, as they say, isa financial theory which postulates “that asset prices and historical returns eventually revert to their long-term mean or average level.”  

One of those who made a good deal of study on the matter is Van K. Tharp, whose story was that he lost all his account twice when he was starting to trade and who subsequently became the author of four acclaimed books, one of which is Trade Your Way to Financial Freedom. Tharp strongly attested that “Entry only plays a small part of the game of making money in the market.” 

Begging the question

Yet, efforts in finding ways to improve entry techniques cannot be neglected. Investors still have to watch out for the need “to minimize investment risk and remove the play of emotions” in the act of entry. Thus, while entry may not be essentially as important as exit, it remains to have a good role to make in the trading equation. Tharp has a nice term to it.  He calls it as “trading to beat random entry.”

For example, even experienced investors are stopped out of a good trading idea just because they entered early. The way the market has been moving in the last two months, I’m sure this has happened and continues to happen to many of us. We may have abandoned or thinking of abandoning a good stock pick because the direction of its market price is just unclear as of late.

We are also stopped out sometimes in our eagerness to enter too soon because of the “fear of missing out” or what is called FOMO in the market. This is a classic example of allowing emotional decisions to play in one’s entry.  

These are the common problems faced by beginners. However, these are also situations that are not uncommon to hound experienced investors.  

Just on these two examples, I believe they are good enough to serve as a sufficient basis to assume why a good entry still matters.  

Must Read

[ANALYSIS] How much ‘entry plays’ you need to succeed in your trade

Before we leave the subject, however, let me reiterate that even the proponents of good entry admit that the following are more contributory to a successful trade. These are exit strategy, risk management, and position sizing, to mention the three most critical factors.

We are told that there are only two reasons you should get out or exit a trade. These are when you take a loss or when you take a profit.  

There are many books available on these two subject matters. But let me add that in taking a loss, you may just go back to the recovery risk table I presented in my article on March 10. The said table shows the exponential return you need to recover.  It also shows you the level of loss you can reasonably play before you need to fold.  

Based on the table, you should not incur a loss of more than 20%. Otherwise, you’ll be like Tharp when he first started to trade.  

In taking a profit, there are qualitative and quantitative methods recommended. We’ll explore them sometime.   

Position sizing

Risk management is about “minimizing potential losses without sacrificing upside potential.” The principle behind it is based on analyzing the expected returns of an investment compared to the amount of risk taken on to earn those returns. This is a subject Tharp sufficiently addressed in his book in what he calls the R Multiple – a form of measurement of risk versus reward. To illustrate, if you buy a stock for P10 (risk) and sell it for P15 (reward) your R would be (P15 – P10) divided by P10] is equal to 0.5 or 50%.  Thus, enter a trade only where the R is high.

Position sizing is referred to as the method of determining the size of the shareholdings to be held by an investor. It is also referred to as the amount of money being traded in a given stock or asset.  Its application will help investors earn maximum returns and at minimal risk.

For proper position sizing, there are three factors to be properly weighed.  First is the account risk.  Typically, account risk is expressed as a percentage of the investor’s total capital.  As a rule of thumb, individual investors should not risk more than 2% of their investment capital on any given trade.  (Fund managers risk less than this amount.) With a P500k total capital, the investor is limited to risk P10k per trade only. The rationale behind this is that even if the investor loses 10 consecutive trades in a row, the impact is equivalent to only 20% of investment capital.  

Next is the trade risk. This involves determining where to place the stop-loss order for the specific trade.  For example, if an investor intends to buy SMC at P105 and place a stop-loss order at P185, the trade risk is P20 per share.

To derive the proper position size of the above information, divide the account risk of P10k per trade and the trade risk of P20 per share. This means the investor should only buy 500 shares (P10k/ P20) of SMC to achieve maximum returns at minimal risk.

So, what is a good entry point? We’ll take up this question next time as we analyze what is happening in the market as we usually do.  We devoted the whole article today just to raise the point that entry is an important part of the trading cycle, too.

Don’t miss the discussion on the different methods and/or techniques for finding good entry points. It will be next. – Rappler.com

(The article has been prepared for general circulation for the reading public and must not be construed as an offer, or solicitation of an offer to buy or sell any securities or financial instruments whether referred to herein or otherwise.  Moreover, the public should be aware that the writer or any investing parties mentioned in the column may have a conflict of interest that could affect the objectivity of their reported or mentioned investment activity.  You may reach “Thin Slicing” at densomera@yahoo.com.) 

This violation was related to BPI’s disposal of its treasury shares, which it acquired after its merger with BPI Family Savings Bank. A treasury share is a share of the company issued and sold to the public, which was later acquired or repurchased by the same company.

The Ayala-led bank originally intended to decrease its authorized capital stock by retiring the acquired treasury shares, but the BSP did not approve of this, stating that the retirement of treasury shares does not count as a sale or disposition of shares in accordance with Section 10 of the General Banking Law.

Section 10 allows a bank to purchase or acquire its own capital stock after obtaining the approval of the BSP’s Monetary Board. In any case, the bank must sell or dispose of the treasury stocks within six months from the time of their purchase or acquisition. 

After the BSP’s initial disapproval, in March 2023, the BPI’s board of directors then approved the declaration of property dividends to act as the bank’s mode of disposal for the treasury shares. Under it, 406,179,276 common shares being held in treasury would be distributed to all eligible stockholders as of March 29. BPI also obtained the approval of the Securities and Exchange Commission on June 13.

BPI said it would announce the payment date and details of the distribution of the dividend “in due course.” The bank also said that the dividend declaration as a mode of disposal for the treasury shares would “only be completed after obtaining regulatory approvals.”

In a letter also dated June 13, the BSP imposed the P1-million penalty for BPI’s failure to comply with Section 10 on the disposal of treasury shares.

BPI sees boost from Gokongwei network with Robinsons Bank merger

– Rappler.com

The settlement on Monday, June 12, follows months of embarrassing disclosures that JPMorgan ignored internal warnings and overlooked red flags about Epstein because he had been a valuable client.

Epstein was a JPMorgan client from 1998 to 2013 and was kept on even after being arrested in 2006 on prostitution-related charges and pleading guilty two years later.

Monday’s accord would resolve claims against the largest US bank by potentially more than 100 victims, led by a former ballet dancer known as Jane Doe 1, who said Epstein abused them when they were young women and teenage girls.

Epstein killed himself at age 66 in a Manhattan jail cell in August 2019 while awaiting trial on sex trafficking charges.

“It could be that the bank doesn’t want this to stay in the press,” said Carliss Chatman, a professor at Washington and Lee University School of Law in Virginia. “At a time Americans are questioning the banking system, associating Chase with human trafficking is not good for business.”

Davia Temin, chief executive of crisis management firm Temin and Co., said settling rather than fighting to the end sends “the right message across Wall Street.”

The settlement of the civil case requires approval by US District Judge Jed Rakoff in Manhattan.

“Any association with [Epstein] was a mistake and we regret it,” JPMorgan said in a statement. “We would never have continued to do business with him if we believed he was using our bank in any way to help commit heinous crimes.”

Monday’s settlement came three and a half weeks after Deutsche Bank, where Epstein was a client from 2013 to 2018, agreed to pay $75 million to end a similar lawsuit by Epstein victims.

“Deutsche Bank’s settlement…likely created momentum,” said Adam Zimmerman, a law professor who recently accepted a position at the University of Southern California. “A settlement with Epstein’s victims frees JPMorgan to begin to turn the page and change the narrative.”

The $290-million settlement amount was confirmed by David Boies, a lawyer for Epstein’s victims.

JPMorgan did not admit wrongdoing in agreeing to settle, according to a person familiar with the matter, who spoke on condition of anonymity.

“The settlements signal that financial institutions have an important role to play in spotting and shutting down sex trafficking,” Sigrid McCawley, a lawyer for victims in both lawsuits, said in a statement.

Pointing the finger

JPMorgan still faces a lawsuit by the government of the US Virgin Islands, where Epstein owned two neighboring islands and was suspected of abusing victims in his mansion.

It is also suing former executive Jes Staley for shepherding Epstein’s relationship with the bank and concealing what he knew about his former friend.

JPMorgan wants Staley to cover its losses in both lawsuits and forfeit eight years of pay.

Last month, Rakoff said JPMorgan could be liable to Epstein’s victims if they could show Staley had firsthand knowledge that Epstein ran a sex-trafficking venture.

Staley left JPMorgan in 2013 and was later Barclays’ chief executive for six years.

He testified under oath on Saturday, June 10, two weeks after JPMorgan chief executive Jamie Dimon, in his own deposition, denied discussing Epstein’s accounts.

In a statement, the US Virgin Islands said it “will continue to proceed with its enforcement action to ensure full accountability for JPMorgan’s violations of law.”

The territory’s case is the largest remaining over Epstein, following civil lawsuits against his estate and the conviction of former girlfriend Ghislaine Maxwell for aiding his abuses. Maxwell is appealing her conviction and 20-year prison sentence.

Lawyers for Staley did not respond to requests for comment.

Staley has said he regretted befriending Epstein but denied knowing about his sex trafficking. It wasn’t clear whether his June 10 deposition was a factor in Monday’s settlement.

“Chase’s defense has been that Staley was a lone wolf and this wasn’t Chase’s culture, but more evidence had been coming out that may make it harder for Chase to point the finger at him,” Chatman said.

Another key JPMorgan executive who has been a focus of the litigation is Mary Erdoes, its asset and wealth management chief.

Epstein’s victims have portrayed her in court filings as a key defender of keeping Epstein as a client, including after former general counsel Stephen Cutler told her and Staley in 2011 the bank should terminate the relationship.

Dimon said in his deposition that Cutler had authority to override Erdoes and Staley and fire Epstein. Cutler was not immediately available for comment on Monday.

“While we regret any association with Jeffrey Epstein, we would never have continued to do business with him if we believed he was using our bank to commit heinous crimes,” a JPMorgan spokesperson said when asked about Erdoes’ involvement. “In fact, Mary Erdoes and others exited him as a client six years before he was charged with human trafficking.” – Rappler.com

Marking the closing of the biggest banking deal since the 2008 financial crisis, UBS chief executive Sergio Ermotti and chairman Colm Kelleher said despite challenges there were “many opportunities” for clients, staff, shareholders, and Switzerland.

The combined group will oversee $5 trillion of assets, giving UBS a leading position in key markets it would otherwise have needed years to grow in size and reach. The merger also ends Credit Suisse’s 167 years of independence.

Having peaked at more than 82 Swiss francs in 2007, the price of Credit Suisse shares has been eroded by scandals and losses in recent years and closed at 0.82 francs on Monday.

UBS shares gained 0.8%, valuing the bank at about 64 billion Swiss francs ($70 billion).

The two banks now jointly employ about 120,000 worldwide, although UBS has already said it will be cutting jobs to reduce costs and take advantage of synergies.

UBS announced a string of management changes with the closing including at Credit Suisse AG, which is now a UBS subsidiary that will be run separately.

Of the more than 160 leaders being confirmed or appointed, just over a fifth are from Credit Suisse, a UBS spokesperson said.

Andre Helfenstein will remain as head of the Credit Suisse domestic business, which UBS has said it is considering all strategic options for.

Closing rush

UBS agreed on March 19 to buy Credit Suisse for a knockdown price of 3 billion Swiss francs and up to 5 billion francs in assumed losses in a rescue orchestrated by Swiss authorities with Switzerland’s second largest bank on the edge of collapse.

On Friday, June 9, UBS finalized an agreement on the conditions of a 9-billion-Swiss-franc public backstop for losses from winding down parts of Credit Suisse’s business.

UBS sealed the takeover in less than three months, a tight timetable given its scale and complexity, in a race to provide greater certainty for both clients and employees.

The deal, however, exposed two myths – namely, that Switzerland is a steady, predictable investment destination and that banks’ problems would no longer hit taxpayers.

“It was supposed to be the end of too-big-to-fail and state-led bailout,” said Jean Dermine, professor of banking and finance at INSEAD, adding that the episode showed this central reform after the global financial crisis had not worked.

The rescue also showed that even big global banks are vulnerable to bouts of panic, said Arturo Bris, professor of finance and director of the IMD World Competitiveness Center. An outflow of deposits forced Credit Suisse to seek help.

Switzerland’s reputation as a “safe, predictable political environment where the private sector operates freely and without government intervention” had taken a hit, Bris added.

The disappearance of Credit Suisse’s investment bank, which UBS has said it will seek to cut back significantly, marks yet another retreat of a European lender from securities trading, a business now largely dominated by US firms.

Since the global financial crisis, many banks have pared back their global ambitions in response to tougher regulations.

Swiss regulator FINMA, which came under fire for its handling of the situation, said one of the most pressing goals for the newly merged bank was to quickly reduce the risk of the former Credit Suisse investment bank.

UBS is set to book a massive second-quarter profit after buying Credit Suisse for a fraction of its so-called fair value.

Ermotti has, however, warned the coming months will be “bumpy” as UBS gets on with absorbing Credit Suisse, a process it said will take three to five years.

Presenting the first snapshot of the new group’s finances last month, UBS underscored the high stakes involved, by flagging tens of billions of dollars of potential costs – and benefits, but also uncertainty surrounding those numbers.

Next challenge

Possibly the first challenge for Ermotti, brought back to UBS to steer the merger, will be a politically fraught decision about the future of Credit Suisse’s “crown jewel.”

Bringing its domestic business into the UBS fold and combining the two banks’ largely overlapping branch networks could produce significant savings, which Ermotti has indicated as a base scenario.

But he will need to weigh that against public pressure to keep Credit Suisse’s brand, identity, and, critically, workforce.

Analysts say public concerns the new bank will be too big – with a balance sheet roughly double the size of the Swiss economy – means UBS might need to tread carefully to avoid being exposed to even tougher regulation and capital requirements.

They also warn that uncertainty inevitably caused by a takeover of such scale can leave UBS struggling to retain staff and customers and that it remained an open question whether the deal can deliver value for shareholders in the long run. – Rappler.com

$1 = 0.9101 Swiss francs

The dollar made little progress as investors opted for riskier assets, with the Fed widely expected on Wednesday, June 14, not to hike rates for the first time since January 2022.

However, oil fell around 4% with Brent crude futures closing at their lowest level since December 2021 on concerns about weak demand and rising global supplies, with rate uncertainty and inflation data added to worries.

Investors will be closely monitoring US consumer price index (CPI) data, due to be released on Tuesday, June 13, and producer price index (PPI) data, due out Wednesday, for a reading of how well the Fed’s tightening cycle has managed to curb high inflation.

The benchmark S&P 500 closed at its highest level since April 2022 after last week rising 20% from its October 12 finishing low, heralding the start of a new bull market, as defined by some market participants.

The equity index’s gains partly reflected expectations for a Fed tightening pause and for CPI and PPI to come in lower than the prior month, money managers and strategists said.

“Investors have been looking forward to a Fed pause in the rate hiking cycle since they started over a year ago. They’re trying to get out ahead of that,” said Burns McKinney, portfolio manager, NFJ Investment Group in Dallas.

In particular, McKinney saw out-performance on Monday of rate sensitive growth sectors such as technology, amid bets that a low inflation reading would give the Fed the go-ahead to stop hiking rates, at least at this week’s meeting.

The Dow Jones Industrial Average rose 189.55 points, or 0.56%, to 34,066.33, while the S&P 500 gained 40.07 points, or 0.93%, to 4,338.93.

The technology-heavy Nasdaq Composite added 202.78 points, or 1.53%, to 13,461.92 in its biggest one-day percentage gain since May 26.

MSCI’s gauge of stocks across the globe gained 0.66%, hitting its highest level since April 2022 in its third straight day of gains.

Traders are pricing in a roughly 75% chance of the Fed keeping rates steady, and a 25% chance of a 25-basis-point (bps) rate hike, according to the CME FedWatch tool.

While the Fed is expected to keep rates steady, surprise rate hikes by the Reserve Bank of Australia and the Bank of Canada last week have still kept investors alert to the idea of prolonged tightening cycles.

The European Central Bank will deliver its rate decision on Thursday, June 15, with analysts expecting it to raise rates by 25 bps and to signal that there is more ground to cover. But the Bank of Japan, which will announce its plan on Friday, June 16, is expected to maintain its ultra-loose policy.

In currencies, the dollar index, which measures the greenback against a basket of major currencies, rose 0.087%, with the euro up 0.08% to $1.0756.

The Japanese yen weakened 0.15% versus the greenback at 139.57 per dollar, while sterling was last trading at $1.2509, down 0.48% on the day.

“Though it’s more likely than not that the Fed will ‘skip’ a hike this month, it seems as if no one wants to be caught on the wrong side of the market should they choose to hike this month, keeping volatility low across most majors,” said Helen Given, FX trader, at Monex USA in Washington.

Given said a Fed hike “would likely be very dollar-positive as it would go against current market expectations.”

In US Treasuries, benchmark 10-year notes were down 0.7 basis point to 3.738%, from 3.745% late on Friday, June 9. The 30-year bond was last down 0.8 basis point to yield 3.8786% while the 2-year note was last down 2.3 basis points to yield 4.5813%.

As traders waited for central bank decisions and worried about weak Chinese demand and rising Russian supply, US crude settled down 4.35% at $67.12 per barrel and Brent settled at $71.84, down 3.94% on the day. – Rappler.com

Department of Labor data showed on Friday that the US economy added 339,000 jobs last month, significantly higher than most estimates and suggesting tighter labor market conditions which might prompt a Fed rate hike.

The market mood was also supported by the US Senate passing bipartisan legislation on Thursday, June 1, that lifted the federal government’s $31.4-trillion debt ceiling and averted what would have been a first-ever default. The bill, which had been passed by the House of Representatives on Wednesday, May 31, heads to President Joe Biden, who is expected to sign it.

“We are of the view that the Fed will keep interest rates steady until sometime next year,” said Tom Plumb, portfolio manager at Plumb Balanced Fund, adding that the US economy is much stronger than most people realize.

The MSCI world equity index, which tracks shares in almost 50 countries, was up 1.52%. The pan-European STOXX 600 index rose 1.21%.

On Wall Street, all three main indexes ended higher, led by gains in financials, industrials, consumer discretionary, technology, and healthcare stocks.

The Dow Jones Industrial Average rose 2.12% to 33,762.76, the S&P 500 gained 1.45% to 4,282.37, and the Nasdaq Composite added 1.07% to 13,240.77.

US Treasury yields were higher as investors bet on a possible increase in rates although many believe the Fed is likely to stick with a pause in hikes when it meets later this month. Benchmark 10-year notes were up at 3.695%, while yields on the more rate-sensitive 2-year notes rose to 4.509%.

The US dollar edged higher in choppy trading after the strong job growth data. The dollar index rose 0.483%, with the euro dropping 0.5% to $1.0707.

Oil prices gained more than 2% on Friday as attention turned to a meeting of the Organization of the Petroleum Exporting Countries and allies this weekend.

Brent futures rose 2.5% to settle at $76.13 a barrel, while US West Texas Intermediate crude rose 2.3% to $71.74.

Gold prices slipped as the US dollar rose. Spot gold dropped 1.5% to $1,948.11 an ounce, while US gold futures fell 1.55% to $1,947.40 an ounce. – Rappler.com

US President Joe Biden and top congressional Republican Kevin McCarthy on Saturday, May 27, reached a tentative deal to raise the federal government’s $31.4-trillion debt ceiling, two sources familiar with the negotiations said, potentially averting an economically destabilizing default.

But the deal still faces a difficult path to pass through Congress before the government runs out of money to pay its debts in early June.

“This will be pretty good for the market,” said Amo Sahota, director at KlarityFX, adding that it may give more reason for the US Federal Reserve to feel confident about raising rates again.

“Although we want to see what the…deal looks like,” Sahota added.

While an end to uncertainty would be welcome, the relief that may come from a deal may be a short-lived sugar high for investors. That’s because once a deal is reached, the US Treasury is expected to quickly refill its empty coffers with bond issuance, sucking out hundreds of billions of dollars of cash from the market.

The raising of the ceiling is expected to be followed by the issuance of nearly $1.1 trillion in new Treasury bills (T-bills) over the next seven months, according to recent JPMorgan estimates, a relatively large amount for that short a period.

This bond issuance, presumably at the current high interest rates, is seen depleting banks’ reserves, as deposits held by private companies and others move to higher paying and relatively more secure government debt.

That would accentuate an already prevalent trend of deposit outflows, put more pressure on liquidity, or ready cash, available to banks, push up rates charged on near-term loans and bonds, and make funding more expensive for companies already reeling under a high interest rate environment.

“There is certainly going to be a relief in the fixed income markets,” said Thierry Wizman, global FX and interest rates strategist at Macquarie.

“But what this doesn’t solve, is that along the whole Treasury curve yields have gone up recently…in anticipation that there will be a lot of issuance of treasury bonds and notes and bills in the next few weeks because the US Treasury has to replenish its cash.”

A BNP strategist estimated some $750 billion to $800 billion could move out of cash-like instruments, such as bank deposits and overnight funding trades with the Fed. That decline in dollar liquidity will get used to buy $800 billion to $850 billion in T-bills by the end of September.

“Our concern is that if liquidity starts leaving the system, for whatever reason, this creates an environment where markets are crash-prone,” said Alex Lennard, investment director at global asset manager Ruffer. “That’s where the debt ceiling matters.”

Mike Wilson, equity strategist at Morgan Stanley, agreed. Treasury bills issuance “will effectively suck a bunch of liquidity out of the marketplace, and may serve as the catalyst for the correction we have been forecasting,” he said.

The drain on liquidity is not a given, however. The T-bill issuance could be partly absorbed by money market mutual funds, shifting away from the overnight reverse repo facility, where market players lend overnight cash to the Fed in exchange for Treasuries.

In that case, “the impact on broader financial markets would likely be relatively muted,” Daniel Krieter, director of fixed income strategy, BMO Capital Markets, said in a report.

The alternative, where the liquidity drain comes from banks’ reserves, “could have a more measurable impact on risk assets, particularly at a time of elevated uncertainty in the financial sector,” he added.

Some bankers said they fear financial markets may not have accounted for the risk of a liquidity drain from banks’ reserves.

The S&P 500 has gained handsomely through the year while spreads on investment-grade and junk bonds have either tightened or only marginally widened from January.

“Risk assets have likely not fully priced in the potential impact of the tightening of liquidity in the system through an abundance of T-bill issuance,” said Scott Schulte, a managing director in Citigroup’s debt capital markets group.

Bankers put it to hope that the debt ceiling impasse would be resolved without significant dislocation to markets, but warn that’s a risky strategy.

“Credit markets are pricing in a resolution in Washington, so if that is not delivered by early next week, we are likely to see some volatility,” said Maureen O’Connor, global head of high-grade debt syndicate at Wells Fargo.

“That said, many investment-grade companies preempted this risk which is why we saw such an active May calendar,” she added. – Rappler.com

Treasury yields climbed as investors rethought how long interest rates were likely to keep rising.

Democratic and Republican negotiators were still struggling to reach a deal to raise the US government’s debt ceiling with the deadline looming.

The MSCI world equity index, which tracks shares in 49 nations, gained 1.09% but was still down 0.51% on the week.

US data showed stronger-than-expected consumer spending in April. The increase in personal consumption expenditures raised expectations the Federal Reserve will hike interest rates again in either June or July.

US President Joe Biden and top congressional Republican Kevin McCarthy appeared to be closing in on an agreement ahead of a June 1 deadline that would raise the government’s $31.4-trillion debt ceiling for two years. A top Republican, however, said there were disagreements over some benefit programs for low-income Americans. Meanwhile, after the market close, Treasury Secretary Janet Yellen extended the deadline for raising the debt limit to June 5.

The dollar eased against a basket of currencies, but was still on track for a third straight weekly gain as markets bet on higher-for-longer interest rates.

Gold advanced from two-month lows, and oil prices rose.

Eurozone government bond yields were higher as robust economic data and hawkish remarks by central bank officials triggered some upward repricing in market bets on eurozone interest rates.

“This week has been a bit of a wake-up call to rate expectations. There is a realization that inflation is going to be stickier for a lot longer,” said Mike Hewson, chief markets strategist at CMC Markets.

The Dow Jones Industrial Average rose 1% to 33,093.34, the S&P 500 gained 1.30% to 4,205.45, and the Nasdaq Composite climbed 2.19% to 12,975.69.

Chip stocks surged for a second day on optimism about artificial intelligence. Marvell Technology finished up more than 30% after it forecast its annual artificial-intelligence revenue would double.

Shares of the world’s most valuable chipmaker, Nvidia, added 2.54% after vaulting to a record high on Thursday, May 25, following a bumper forecast.

The pan-European STOXX 600 index closed 1.2% higher, bouncing back from Thursday’s eight-week low. Swedish gaming company Embracer jumped 13.1% to top the index, and Faurecia added 7.5% after Jefferies upgraded the French car parts maker to “buy.”

Italy hopes to close 2023 with economic growth of between 1.2% and 1.4%, higher than the official target set at 1% in April, Economy Minister Giancarlo Giorgetti said.

The yield on 2-year Treasury notes, which rises with traders’ expectations of higher federal fund rates, rose to 4.5598% from 4.51% previously.

China recovery questioned

In Asia, Japan’s Nikkei rose 0.4% with revenue and production upgrades for Nvidia boosting Japanese firms with exposure.

The cost of insuring exposure to US government debt dropped on Friday.

China’s yuan slid along with Chinese stocks as the shine comes off expectations of a booming post-pandemic recovery, sending steel prices in the country to a three-year low.

“The US debt issues are not the only ‘ceiling’ that we are dealing with, as a slowdown in Chinese economic data suggests that a ceiling for growth may be forming as well,” said RBC technical strategist George Davis.

Brent crude settled 69 cents, or 0.9%, higher at $76.95 a barrel and US crude closed up 84 cents, or 1.2%, to $72.67 as traders juggled conflicting messages on supply from key producers ahead of the next OPEC+ policy meeting.

Spot gold prices rose 0.33% to $1,946.69 an ounce, and gold futures edged up 0.03% to settle at $1,944.30. – Rappler.com

Treasury yields were up and the US dollar climbed to its highest level since mid-March.

European markets fell under pressure from news that its biggest economy, Germany, had sagged into recession.

US President Joe Biden and top congressional Republican Kevin McCarthy were edging close to an agreement on the US debt ceiling, according to a person familiar with the talks. The two sides were just $70 billion apart on a deal, the source said.

The S&P 500 climbed 0.88% to end the session at 4,151.28 points and the Nasdaq surged 1.71% to 12,698.09 points, while the Dow Jones Industrial Average declined 0.11% to 32,764.65 points.

Shares of Nvidia surged over 24% after the firm reported forecast-smashing revenue, indicating Wall Street has yet to price in the game-changing potential of artificial intelligence.

The MSCI world equity index, which tracks shares in 49 nations, gained 0.18%.

The pan-European STOXX 600 index closed 0.3% lower, bringing its losses over three consecutive days to about 2.7%, knocked down by recent losses in luxury stocks and concerns over the talks to raise the US debt ceiling and avert a default.

Updated German gross domestic product figures showed the eurozone powerhouse slipped into recession in the first few months of the year despite an initial reading suggesting otherwise.

The data pressured the euro, which was down 0.2%.

Asia had been divided overnight with Japan plodding higher but Hong Kong tumbling almost 2% to its weakest level of the year amid renewed geopolitical concerns surrounding Hong Kong-listed Chinese tech giants such as Tencent, Alibaba, AIA, and Meituan.

News of progress in the US debt talks came as traders were wary of a possible default in early June.

A credit ratings downgrade could affect the pricing of trillions of dollars of Treasury debt securities. A warning about just such a move by Fitch on Wednesday, May 24, was mirrored by smaller rival DBRS on Thursday.

On the interest rate front, minutes from the Federal Reserve’s latest meeting released on Wednesday showed that policymakers “generally agreed” that the need for further rate increases “had become less certain.”

Boston Fed President Susan Collins said on Thursday the time may be at hand for the US central bank to push the pause button on its interest-rate-hiking campaign to assess the impact of past tightening.

“Most of the morning’s data supported more Fed tightening, so traders ignored Fed’s Collins’ comment that a rate pause would give us space to assess actions to date,” said Edward Moya, senior market analyst at OANDA.

The number of Americans filing new claims for unemployment benefits rose modestly last week, and the prior week’s data was revised sharply lower, the Department of Labor said.

The dollar index, which tracks the greenback against a basket of currencies of other major trading partners, rose to 104.25.

Treasury yields surged on signs of persistent strength in the US labor market, but gains on short-term bills were pared when top congressional Republican Kevin McCarthy said some progress had been made in talks to raise the debt ceiling.

Gold slid to its lowest level in two months on Thursday as optimism around the US debt ceiling talks lowered safe-haven demand for bullion and robust economic data fueled bets of another rate hike by the Fed.

“It’s a one-two punch for gold…. If a deal is done over the weekend, then that will remove the biggest risk off the table,” Moya said.

Spot gold prices fell 0.87% to $1,939.97 an ounce, and gold futures settled down 1.1% at $1,943.70.

Oil prices dropped by $3 a barrel after Russian Deputy Prime Minister Alexander Novak played down the prospect of further OPEC+ production cuts at its meeting next week.

US crude finished down 3.38% at $71.83 a barrel, and Brent crude futures settled down 2.7% at $76.25 a barrel. – Rappler.com

The ruling by US District Judge Jed Rakoff in Manhattan means Staley, who is also a former Barclays chief executive, could be on the hook for millions of dollars over his ties to Epstein, a JPMorgan client from 1998 to 2013.

Rakoff said he will provide reasons for his ruling “in due course.”

Lawyers for Staley did not immediately respond to requests for comment. JPMorgan declined to comment.

Staley has expressed regret for befriending Epstein, denied knowing about his crimes, and accused JPMorgan of making him a fall guy for its own supervisory failures.

Now 66, Staley led JPMorgan’s asset management business from 2001 to 2009 and its investment bank from 2009 to 2013.

JPMorgan wants him cover losses it may incur in two lawsuits saying it should have cut ties to Epstein because it knew or should have known he sexually abused young women and girls.

It also wants Staley to forfeit his compensation from 2006 to 2013, estimated in the tens of millions of dollars.

Epstein died in a Manhattan jail in August 2019 while awaiting trial for sex trafficking. New York City’s medical examiner called the death a suicide.

Suggestive emails

One of the lawsuits JPMorgan faces is a proposed class action by Epstein accusers, led by a former ballet dancer known as Jane Doe 1.

The other is by the US Virgin Islands, where Epstein allegedly abused women on a private island he owned.

That territory has said Staley and Epstein swapped sexually suggestive emails about women after Epstein pleaded guilty in 2008 to a Florida prostitution charge and was required to register as a sex offender.

Jane Doe 1 said one of Epstein’s friends sexually assaulted her. JPMorgan later said Staley was that friend. Staley has called the accusation “baseless.”

Rakoff has said JPMorgan could be liable if Epstein’s accusers proved that Staley had firsthand knowledge that Epstein ran a sex-trafficking venture.

On Tuesday, May 23, JPMorgan accused the US Virgin Islands of complicity in Epstein’s crimes over two decades, by letting him buy off high-ranking officials in exchange for tax breaks and looking the other way.

The three lawsuits are scheduled for an October 23 trial.

Deutsche Bank, where Epstein was a client from 2013 to 2018, this month reached a $75-million settlement with women who say Epstein abused them.

The cases in the US District Court, Southern District of New York are: Jane Doe 1 v JPMorgan Chase & Co., No. 22-10019; Government of the US Virgin Islands v JPMorgan Chase Bank NA, No. 22-10904; and JPMorgan Chase Bank NA v Staley, in Nos. 22-10019 and 22-10904. – Rappler.com