BONK Dropped By 70% as Momentum Shifted 📉

🐺 Hi pack-mates,

This is Howling Markets, the kind waiter that brings you all the latest financial news served on a silver platter!

Today we will be covering:

• Education: What Are The Three Stages of a Financial Crisis 📊

• US Banking Sector Is Expected to Record Large Losses in Q4 Earnings 💰

• BONK Drops By 70% as Momentum Shifts 📉

• Equity and Debt Markets Daily Update ⚖️

• And more!

Market Watch 👀

What Is the Earnings Season?

The earnings season is commonly defined by investors as a period in which the major publicly traded companies release their earnings.

By law, publicly traded companies must file, audit and publish their financial statements every three months, referred to as a “quarter”. So, during a year there are 4 earnings seasons, each occurring around 2/3 weeks after the previous quarter has ended. But if it’s mandatory, why is it such a big deal?

Earning season is not just a period where companies communicate their data, it is also an occasion in which all the forecasts and estimations are checked to determine if a company has done better or worse than expected.

Because of this, during the weeks leading up the earnings the volatility in the markets skyrockets and once they are released, the stock prices can even jump by more than 20% if the news are either particularly good or bad.

For example, at the beginning of February 2022 Meta released lower than expected revenues in its Q4 earnings for the previous year and, as a result,  the stock price plummeted more than 26% overnight!

Invidia, instead, is a great example of the opposite! Last year NVDA reported a surprise of +18% in their earnings and the price shot up more than 24% in one day!

US Banking Sector is Expected to Register Large Losses in Q4 Earnings

Now that we have discussed the relevance of the earnings season, we must keep a close attention to one of the sectors more at risk in our economy: the banking sector.

Some analysts have forecasted that on average the Q4 earnings of the largest banks in the US will fall by 13% compared to the previous year. Among the main causes, non-performing loans are expected to reach $24.4 billion due to the high interest rates environment.

Additionally, recent surveys show that delinquencies are rising on credit card debts and consumer loans, putting even more stress on the banking sector.

Gerard Cassidy, an analyst at RBC Capital Markets commented on the situation saying: “Bank reserves are adequate right now because we are nowhere near the stress levels of back then (referring to the pandemic), but have they reserved enough for an economic hard landing? The answer is no.”

In your opinion, will the Federal Reserve be able to achieve a soft landing and avoid economic complications in 2024?

Today’s Howling Question

And now, it is time for our howling question!

We have said that non-performing loans in the US are estimated to increase to $24.4 billion at the end of 2023’s fourth quarter. If this increase materializes, do you know by how much would have this figure jumped since the end of 2022?

a) $3 billion, a 14% increase

b)  $4 billion, a 20% increase

c)  $5 billion, a 26% increase

d)  $6 billion, a 33% increase

e) $7 billion, a 40% increase

Try to answer the question by yourself, and then check the correct answer after the last interesting news!

BONK Dropped By 70% as Momentum Shifted

Last year has been an extraordinary enviroment for the development and improvement of many cryptocurrencies. As a matter of fact, among the well-known names in the field, such as Bitcoin and Ethereum, other tokens jumped on the stage.

Solana disrupted the 2023 cryptocurrency market by registering almost a +1000% increase and posing for the first time some fierce competition to the Ethereum’s network. However, what is even more interesting is BONK, the memecoin built on Solana that achieved 12,000% returns in 2023!

On the other hand, Solana’s and BONK’s 2024 performances are not yet up to the standards of 2023. As the optimism and novelty wore off, Solana mainly moved sideways since the beginning of the year, and it is currently sitting at around -3% YTD.

BONK, instead, suffered a much worse faith. Since the top reached in mid-December, the price fell drastically by more than 70% where it is briefly finding some area of support.

Do you think that these memecoins can have multiple significant spikes up, or do you believe that once they reach their top, they are likely to never recover again?

Equity and Debt Markets Update ⚖️

And now, our daily markets update!

Monday was a great day for the stock market. After a few red days, the market pulled itself up gaining +1.41% during the trading session. However, by looking at the RSI it is possible to notice a divergence, with the price moving higher while this technical indicator is showing a lack of strength.

Because of this, it is possible to expect either a double top or a head and shoulders chart patter pushing the price back down in the near future.

As we can expect from the bond market when the stocks rally, the US 10 year government bond yield fell by -0.44%. However, it is important to carefully look at the candle shape. The candle has a long wick down which precisely tested and rebounded from the support area in the chart.

This shape shows that the yields have tested the market to see if there is enough demand, and now they are ready to move higher.

Answer

The correct answer is d) $6 billion, a 33% increase.

A 33% increase is an exorbitant jump in non-performing loans, but the consensus of the analysts is that as long as the number of non-performing loans is below the top of $30 billion reached during the pandemic, the banking sector should be able to sustain the hit.

Howl-Worthy Memes 😂

🐺 See you next time!

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