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How Does This Rally Ultimately End?

What’s in Today’s Report:

  • How Does This Rally Ultimately End?

Futures are solidly higher following slightly underwhelming inflation data and better than expected earnings.

Chinese CPI rose 0.7% vs. (E) 0.8%, implying inflation pressures may be peaking.

On earnings, TSM beat estimates and upped guidance and that’s helping to lift stocks.

Today there are two notable economic reports, Jobless Claims (E: 320K) and PPI (0.5%, 8.7%) and markets will want to see claims continue to fall and PPI remain generally stable.  We also have multiple Fed speakers today including: Bullard (8:35 a.m. ET), Bostic (9:00 a.m. ET), Barkin & Williams (1:00 p.m. ET) and Harker (6:00 p.m. ET).  Their tone will likely be to reinforce that tapering is happening this year (as the market expects) but that shouldn’t move markets.

Finally, on the earnings front, some important results we’ll be watching today include:  TSM ($1.03), BAC ($0.71), WFC ($1.03), C ($1.82), UNH ($4.41), MS ($1.70), WBA ($1.03 and AA ($1.85).  If inflation is better than expected, that will help stocks rally.