US stocks declined as investors stared at an inflation wall of worry and uncertain Fed tightening path. Traders are still digesting Fed’s Waller support of raising rates by a half point over several meetings. President Biden met with Fed Chair Powell as the White House becomes focused on controlling inflation. It seems they are running out of options, but an easing of China’s tariffs could be on the table.
Eurozone inflation came in hotter-than-expected and negative first quarter readings from France and Denmark are driving global growth concerns.
In the US, it is too early to be confident in saying that the peak of inflation is in place. Last week’s Core PCE data surprised with a reading below 5%, but uncertainty with commodity prices and China’s COVID and growth outlook should keep investors jittery.
AMC I knew AMC was going to have a strong opening after my wife suggested we go see ‘Top Gun: Maverick’ as our first movie in a few years. The highly anticipated sequel did not disappoint as Tom Cruise and Val Kilmer helped bring in $156 million over the weekend. Inflation is not deterring Americans from going to the movie theater. Shares for the movie-chain operator however could not stay positive as price fears mount.
Crude prices rallied after the EU was able to figure out a partial ban on Russia oil and China’s crude demand outlook dramatically improved. The EU has been hard at work to get this partial ban approved but much of this was already priced in. The partial ban includes oil and petroleum products from Russia, while pipeline oil is temporarily exempted, which is what was needed to gain support from Hungary. The embargo is expected to impact two-thirds of Russian oil imports and cost them $10 billion a year in export revenue.
China economic activity was better-than-expected and positive momentum was seen in the fight against COVID. China is a big wildcard for the crude demand outlook and if they start to see COVID fears ease even further, oil could push much higher if global production remains stagnant.
Oil prices gave up most of their gains after reports that OPEC was considering exempting Russia from its oil production targets, which would allow other members to ramp up production. After so much resistance to increase production efforts over the last several months, no one was really expecting OPEC to signal willingness to pump more crude.
Gold prices declined as global bond yields surged as investors became more concerned about inflation and global economic growth. It looks like gold needs Chinese growth prospects to weaken, but not from the eurozone. Gold has a hard ceiling at the $1870 level and if the bond market selloff is back, the precious metal could struggle in the short-term.
Month end provides some exaggerated moves but if gold falls below the $1830 level, bearish momentum could take prices towards the $1800 level.
Bitcoin is holding up comfortably above the $30,000 level as tech stocks look to buck the bearish trend on Wall Street. Bitcoin continues to follow what happens on Wall Street but that may change if more institutional investors believe that the crypto bottom has been made.
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