Unfortunately, PPI disappointed investors as the inflation improvements hyped by analysts and the financial media failed to show a meaningful change.  However, there was a silver lining in the last thirty minutes of the day as the bulls finally pushed back, giving hope that an overdue relief in the selling might begin.  With a light day on the earnings calendar, we still have to deal with the Import/Export and Consumer Sentiment reports to find out if the bulls can stay inspired to rally, so stay focused on potential whipsaws as we move toward the uncertainty of the weekend.

Overnight Asian markets rallied, with Hong Kong and the Nikkei surging upward by more than 2.50%.  European markets are also in the spirit of a relief rally, seeing green across the board this morning.  With a lighter day of earning and economic data U.S. point to a bullish open after six straight days of selling.  Expect price action to remain challenging, watching for large point whipsaws as we slide toward the uncertainty of the weekend amid all the geopolitical tensions.

Economic Calendar

Earnings Calendar

We have a much lighter day on the Friday earnings calendar with about 75 listed but a large number of them unconfirmed.  Notable reports include DTEGY, HMC, LFMD, RGF, and SDPI.

News & Technicals’

Bitcoin jumped back above $30,000 on Friday as it rebounded from levels not seen since late 2020.  Luna, the cryptocurrency associated with TerraUSD, or UST, is now worth $0 as the stablecoin has dramatically lost its $1 peg.  On top of the UST saga, crypto markets have been hit by a number of other headwinds.  Elon Musk says the Twitter deal is on hold as he waits to find out the number of fake accounts.  Twitter’s stock plummeted 18% following the announcement.  Musk announced last month that he intends to buy Twitter for $44 billion.  He’s tweeted that one of his main priorities would be to remove “spambots” from the platform.  Fed Chairman Jerome Powell cautioned Thursday that getting inflation under control won’t be easy.  “Nonetheless, we think there are pathways … for us to get there,” he said in an interview with Marketplace published Thursday.  Senior administration officials said that the Food and Drug Administration would announce specific actions to increase baby formula imports in the coming days amid a nationwide shortage.  During the first week of May, 43% of baby formula supplies were out of stock at stores across the U.S., according to Datasembly, a company that tracks retail data.  The shortage comes after Abbott Nutrition, the nation’s largest baby formula manufacturer, closed its plant in Sturgis, Michigan, amid a recall due to contamination concerns.  Four infants who consumed products from the plant were hospitalized with bacterial infections.  Two of the infants died.

NATO membership would be a historic decision for Finland, which shares a 1,300-kilometer border with Russia.  Atlantic Council’s Northern Europe director Anna Weislander says both Finland and Sweden are well prepared to meet the oft-repeated political and military threats against the move by Russian President Vladimir Putin.  The armed forces of both countries enjoy high compatibility with NATO member states, she said.  Japanese conglomerate SoftBank Group may, for the first time, spend more on share buybacks than investments through its landmark Vision Fund, according to CLSA’s Oliver Matthew.  SoftBank on Thursday posted a record $27 billion loss in its Vision Fund as tech stocks have plummeted in recent months.  Shares of SoftBank soared more than 12% on Friday but still finished the week more than 2% lower as investors globally have shunned riskier assets such as tech stocks.  Treasury yields surged higher in early Friday trading, with the 5-year up nine basis points to trade at 2.91% as the 30-year also rallied nine basis points to 3.07%. 

The bears kept up the selling pressure yesterday after the PPI disappointed investors hoping for more of an improvement.  However, in the last 30 minutes, a sharp larry began cutting the day’s losses substantially.  Futures suggest a bullish open, hoping that the Import/Export and Consumer Sentiment numbers don’t give more inspiration to the bears.  After six straight days of selling, indicators suggest we are overdue for a relief rally.  If we do trigger some short covering, remember to respect overhead resistance and downtrend levels for entrenched bears likely willing to defend. 

Trade Wisely,

Doug