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The meme stock rally hints at a lingering complacency amongst investors

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The meme stock rally hints at a lingering complacency amongst investors: Tom Essaye Quoted in Forbes

GameStop, AMC Stocks Surge Another 100% As Meme Stock Rally Accelerates

The meme stock rally “hints at a lingering complacency amongst investors,” Sevens Report founder Tom Essaye wrote to clients Tuesday. Essaye cautioned it’s hard to draw conclusions from the price actions of relatively small stocks like AMC and GameStop, but considering the runway these stocks had to surge with little pushback, the broader market may be “vulnerable to an ‘air pocket’” on a negative catalyst.

Also, click here to view the full Forbes article published on May 14th, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

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CPI Preview: Good, Bad, & Ugly

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CPI Preview: Good, Bad, & Ugly: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Thoughts on the Meme-Stock Revival
  • CPI Preview: Good, Bad, & Ugly
  • Chart – NY Fed’s Consumer Survey Contains Hot Inflation Print

Global markets are little changed this morning as traders digest mostly better-than-expected economic data from Europe and await today’s PPI report and commentary from Fed Chair Powell.

“Meme stocks” GME and AMC are notably up 58% and 64%, respectively, in pre-market trading this morning (more on that in today’s report).

Economically, German CPI met estimates at 2.2% y/y while Economic Sentiment in the German ZEW came in at 47.1 vs. (E) 45.0. Domestically, the NFIB Small Business Optimism Index beat with a headline of 89.7 vs. (E) 88.3 but the data is having a limited impact on markets this morning.

Looking into today’s session, focus will be on PPI (E: 0.3% m/m, 2.2% y/y) and Core PPI (E: 0.2% m/m, 2.3% y/y) due out at 8:30 a.m. ET. A “hot” print would spark hawkish, risk-off money flows while a cooler-than-expected report could see the S&P 500 test all-time-highs as CPI whisper numbers are dialed back.

Finally, there are a handful of Fed speakers today including Cook (9:10 a.m. ET) ahead of the bell and Schmid (8:15 p.m. ET) later this evening. Most importantly though, Powell will speak at 10:00 a.m. ET and if he is more hawkish than two weeks ago at the May FOMC meeting, that will put upward pressure on rates and weigh, potentially heavily, on stocks.

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