“The mind is a fascinating instrument that can make or break you.” ― yvan Byeajee

1. Home Prices Posted Largest Annual Drop in More Than 11 Years in April — U.S. existing home sales, which make up most of the housing market, fell 3.4% in April from the prior month to a seasonally adjusted annual rate of 4.28 million, the National Association of Realtors reported. April sales fell 23.2% from a year earlier.
The national median existing-home price fell 1.7% in April from a year earlier to $388,800, the biggest year-over-year price decline since January 2012, NAR said. Median prices, which aren’t seasonally adjusted, were down 6% from a record $413,800 in June. Home prices have fallen the most in the western half of the U.S., while prices continue to rise from a year earlier in many eastern markets.
2. Risks Posed by AI Technology Spur Calls for New Regulatory Agency — Rising concern in Congress over the risks posed by powerful artificial- intelligence tools in the hands of consumers is giving momentum to a long-simmering idea: Creating a federal agency to regulate technology platforms including AI systems. The agency could be charged with granting licenses for AI platforms, setting operating standards and enforcing compliance with the rules, according to proponents including Sam Altman, chief executive of ChatGPT creator OpenAI. It is one of many ideas being kicked around in Washington as lawmakers contend with a new technology with humanlike abilities to complete an array of tasks, including holding conversations and creating videos—but which also could be used to commit sophisticated crimes and spread false information.
3. Tokyo Meeting Highlights Democracies’ Push to Secure Chip Supplies — top executives from the biggest chip makers in the U.S., Taiwan and South Korea met the Japanese prime minister on Thursday as the world’s industrial democracies look to deepen cooperation in the production of components they increasingly see as central to national security. Japan’s Fumio Kishida met representatives of Intel, TSMC, Samsung and other chip companies, part of Tokyo’s push to step up its domestic manufacturing of computer chips. Kishida said it was essential to tackle “the global issue of stabilizing supply chains” as the U.S. and its partners look to exclude China from a global chip alliance.
The meeting featuring business executives and officials from what are sometimes called the “Fab Four” chip-making powers—the U.S., Taiwan, South Korea and Japan—came on the eve of a summit of leaders of the Group of Seven nations in Hiroshima, Japan, where bolstering strategies to contain China is a top agenda item.
4. Fed Chair Jerome Powell Keeps June Interest-Rate Pause in Play — federal Reserve Chair Jerome Powell suggested he was open to holding interest rates steady at the central bank’s meeting next month, saying that the current banking stress could mean rates may not need to rise as high as otherwise to slow the economy. The Fed has raised its benchmark federal-funds rate rapidly over the past year to fight inflation, most recently this month to a range between 5% and 5.25%, a 16-year high.
Officials have indicated that their decision on whether to raise rates again at their June 13-14 policy meeting could be a close call. A handful have said inflation and economic activity aren’t slowing enough to justify leaving rates unchanged. But others, including Powell, have hinted that they might skip a rate rise to assess the effects of their past increases and the banking-sector strains.

The week ahead — Economic data from Econoday.com:

There will not be any re-cap for the week of May 12th, 2023. We are away due to a urgency family matter.

The staffs at EGS.

The key to trading success is emotional discipline. If intelligence were the key, there would be a lot more people making money trading… I know this will sound like a cliché, but the single most important reason that people lose money in the financial markets is that they don’t cut their losses short. — Victor Spandereo

1. Biden to Deploy Active-Duty Troops to Southern Border as Title 42 Ends — President Biden is sending 1,500 active-duty troops to the southern border, while cities across the country are declaring states of emergency and asking for federal support as the country prepares for a surge of migration expected to accompany the lifting of Title 42 border restrictions next week. A large number of migrants have already been illegally entering El Paso, Texas, in recent days. Hundreds unable to find spots in shelters gathered in the past few days around downtown churches in the border city looking for help, according to photos and videos of the scene.
2. Federal Reserve Raises Rates, Signals Potential Pause — the Federal Reserve approved another quarter-percentage-point interest-rate rise and signaled it could be done lifting rates after that. officials said in their new statement Wednesday they would monitor economic and financial-market developments and the effects of their earlier rate increases “in determining the extent to which additional policy firming may be appropriate to return inflation to 2% over time.”
The statement used language broadly similar to how officials concluded their interest-rate increases in 2006, with officials indicating any further change in rates was more likely to be an increase than a decrease.
3. Robust Hiring in April Shows U.S. Job Market Remains Hot in Cooling Economy — employers added 253,000 jobs in April, the best gain since January, the Labor Department said Friday. Job growth was revised lower in February and March. The jobless rate fell to 3.4% last month, matching the lowest reading since 1969. The low unemployment rate keeps upward pressure on wages, which grew 4.4% in April from a year earlier. That was slightly higher than a 4.3% annual increase in March. Over the past year, inflation hit historic highs, economic growth slowed, the Federal Reserve rapidly raised interest rates and stress emerged in the banking sector. Many economists anticipated those challenges would trigger the labor market to crack.
4. Scrambling to Avoid Default, White House Weighs Debt-Limit Fallback Options — The Biden administration and Capitol Hill leaders are scrambling to avoid a first-ever government default that could arrive as soon as June 1, taking potential alternative strategies more seriously after months of deadlock over raising the country’s borrowing limit.
Publicly, both Republicans and Democrats are still sticking to their demands as the clock ticks. GOP lawmakers are seeking to force cuts to federal spending in exchange for supporting raising the debt limit, while Democrats continue to call for a debt-limit increase without any other policy conditions. The new, accelerated timeline means lawmakers may not have the time to negotiate a broad agreement on contentious budget questions. One way to meet the rapidly approaching deadline would be to raise the debt limit enough to allow the government to keep paying its bills for a few more months, rather than a longer-term solution.

The week ahead — Economic data from Econoday.com:

“The main purpose of the stock market is to make fools of as many men as possible.” ― Bernard M. Baruch

1. Home Prices Rose in February for First Time Since June — The S&P CoreLogic Case-Shiller National Home Price Index, which measures home prices across the nation, rose 0.2% in February compared with January on a seasonally adjusted basis. On a year-over-year basis, the index rose 2% in February, down from a 3.7% annual rate the prior month. The annual increase was the smallest since July 2012.
2. Republicans Pass Debt-Ceiling Bill Aiming to Spark Talks With Biden — House Republicans passed a bill proposing to raise the nation’s $31.4 trillion borrowing limit in exchange for deep cuts in government spending, aiming to jump-start talks with President Biden ahead of an approaching deadline for the federal government to avoid default. The Republicans’ Limit, Save, Grow Act of 2023, which has no chance of passing the Democratic-controlled Senate, serves as the GOP’s opening bid as it heads into expected negotiations with Mr. Biden and congressional Democrats. Republicans want the spending reductions in exchange for agreeing to raise the debt ceiling. Mr. Biden wants an increase with no conditions attached but has said he would negotiate separately on fiscal policy.
3. GDP Report Shows Economic Growth Slowed in First Quarter — U.S. economic growth decelerated to a 1.1% annual rate in the first quarter as consumers faced high inflation, rising interest rates and the onset of banking problems. The rise in U.S. gross domestic product in the first three months of the year marked a slowdown from inflation- and seasonally adjusted 2.6% growth in the fourth quarter, the Commerce Department reported. Consumers cut retail spending in February and March. Home sales and manufacturing output dropped last month, and robust hiring growth eased gradually.
4. Wage Gains Pick Up as Fed Contemplates Next Rate Decision — wage growth stayed elevated to start the year and inflation remained high, likely keeping Federal Reserve policy makers on track to raise rates again next week. Employers spent 1.2% more on wages and benefits in the first quarter from the prior three months, a slight uptick from an upwardly revised 1.1% increase in the fourth quarter, the Labor Department said Friday. The employment-cost index advanced 4.8% last quarter from a year earlier, an easing from the 5.1% gain at the end of last year. The Fed’s preferred gauge of consumer inflation, the personal-consumption expenditures price index, cooled to 4.2% in March from a year earlier, a separate Commerce Department report said. That was down from the previous month’s 5.1% gain and a peak last June, but still well above the central bank’s 2% target.
5. First Republic Bank Is Seized and Sold to JPMorgan — regulators seized First Republic Bank FRC -43.30%decrease; red down pointing triangle and struck a deal to sell the bulk of its operations to JPMorgan Chase JPM 3.09%increase; green up pointing triangle & Co., heading off a chaotic collapse that threatened to reignite the recent banking crisis. JPMorgan said it will assume all of First Republic’s $92 billion in deposits—insured and uninsured. It is also buying most of the bank’s assets, including about $173 billion in loans and $30 billion in securities.
As part of the agreement, the Federal Deposit Insurance Corp. will share losses with JPMorgan on First Republic’s loans. The agency estimated that its insurance fund would take a hit of $13 billion in the deal. JPMorgan also said it would receive $50 billion in financing from the FDIC. San Francisco-based First Republic, the second-largest bank to fail in U.S. history, lost $100 billion in deposits in a March run following the collapse of fellow Bay Area lender Silicon Valley Bank. It limped along for weeks after a group of America’s biggest banks came to its rescue with a $30 billion deposit. Those deposits will be repaid after the deal closes, JPMorgan said.

The week ahead — Economic data from Econoday.com: