What’s in Today’s Report:
- Dow Theory Update (Bearish)
- VIX Analysis Update
Futures are moderately higher following positive China COVID news.
Chinese authorities said they hoped to end all lockdowns in Shanghai by May 20th as cases continue to fall. If the Chinese economy can fully reopen in the coming weeks that will remove a big headwind from stocks.
Economically, EU Industrial Production wasn’t as bad as feared, as IP fell –1.8% vs. (E) -2.0%.
Today the focus will be on the inflation expectations contained in the Consumer Sentiment (E: 63.7) report and if five-year inflation expectations can decline from 3%, that will be another anecdotal signal that inflation pressures have likely peaked (and it should add incrementally to this morning’s rally). We also get two Fed speakers, Kashkari (11:00 a.m. ET) and Mester (12:00 p.m. ET), but we don’t expect them to move markets (look for them to reiterate the current Fed mantra of two more 50 bps hikes).