Dave Lutz of Stifel, Nicolaus has the top stories that traders are talking about today:
US Futures are up 20bp, just off fresh all-time records. With the Russell coming off best day in 2 months, we are not seeing any major pullback in Momentum stocks overnight. There was a fair amount of “technical” buying yesterday, as Options expiry is a huge tailwind this week, and many major indices were able to get upside of key Moving Averages — IWM over 200dma, QQQ thru 50 and 100dmas, IBB bouncing off the 200dma, etc… In Europe, the DAX is up 1% in very heavy trade — 45% above normal trends. Despite the EU fins being in the red (Capital headlines) — most EU markets are euphoric as German investor confidence fell in May, sparking Dovish hopes from the ECB.
The Ukrainian situation had no major flare-up overnight, and Russia’s Micex Index climbed over 1% per cent, extending gains to a fifth day – the longest streak of increases this year. Over in Asia, focus was on Chinese investment, retail sales and factory output growth all disappointing — but there was muted response from China and Aussie markets. Japan leapt 2% as the Yen continued to weaken near 1M lows, and India leapt further on election results. Keep an eye on the breakout in Emerging markets, with the EEM trading at 5M highs this AM.
The 10YY in the USA has reversed lower, and the € has plunged through the 100dma and nears 3M lows against the Greenback as Bundesbank signals willing to back stimulus at the June ECB meeting. The $US/Yen remains just off highs, an additional tailwind for equities. Overall, with the DXY higher we have a large headwind for commodities — Gold is retreating quickly under $US1300 on the Bundesbank headlines, while China headlines have copper retreating only small. The Energy Complex is higher across the board as we near US inventory reports — and chatter increases about the US reversing the Oil Export Ban — WTI is squeezing above the 50 and 100dmas this AM to May peaks. We have a full slate of Catalysts today – NFIB Small Business Optimism at 7:30, New York Fed’s Q1 Household Debt and Credit Report at 8, April Retail Sales at 8:30, Business Inventories at 10, Fed’s Lacker speaks at 10:30, we have a very small POMO at 11, and the Brazilian Central Bank President speaks at 1. Reminder that David Tepper will be speaking at the SALT conference on Weds at 7pmET – Says he will give his outlook – has certainly moved things in the past
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