The Tribune

By CHRIS ILLING

CCO @ ActivTrades Corp

The earnings season in the US continued last week and, once again, had its winners and losers. On Friday last week, labour market data in the US came in worse than expected. The US economy created significantly fewer jobs than expected in April, and the unemployment rate rose slightly. In addition, wage growth surprisingly slowed somewhat. And the ISM Index was also disappointing, as the numbers showed on Friday.

The Institute for Supply Management said Friday that its service sector PMI (purchasing managers index) dropped sharply to 49.4 percent in April compared to 51.4 percent in the prior month. The services sector has been the bedrock for the US economy in the face of higher interest rates. The surprising decline could be the tip of the iceberg when it comes to an economic slowdown. It might build the case for a Federal Reserve rate cut on bad news grounds. The markets like the sense of hope, and rallied on the last trading day of the week.

The big winner was Apple. Despite declining sales and iPhone weakness, the quarter was less bad for Apple than many had feared. But the declines were less severe than expected overall, and Apple chief executive, Tim Cook, maintained an optimistic outlook. And, as a bonus, he also announced the largest share buyback programme in the company’s history. Apple wants to spend $110bn on buying back shares, plus pay a dividend that is 4 percent higher. Apple shares, which have fallen significantly since the start of the year, rose almost 7 percent to a price close to $185 per share.

On the other side of the spectrum was Expedia, one of the world’s leading full-service online travel bands. After the company lowered its full-year forecast but beat the quarterly estimate, the shares tumbled almost 15 percent to around $116 per share. These two examples show the investor how good news can have a negative effect on value and vice versa.

It was a similar story for Bitcoin last week. On Monday, a court in Seattle send Binance founder Zhao to jail for four months after finding him guilty of money laundering. Binance, the world’s largest crypto exchange, facilitated around 1.5m crypto transactions with an estimated value of $900m that were obviously illegal and served to finance Hamas and Al Qaeda, among others. After this bad news, the share price for Bitcoin fell by almost 10 percent. But the price recovered by the end of the week, and Bitcoin again climbed over the $61,000 mark.