Market Madness


General

Central banks and earnings are the primary focus through month end. With Fed and ECB in the mix, I'm reminded the real outcome of 'whatever it takes' action from global governments and central banks is Risk Parity. A custom risk parity basket I use with just 10 year treasuries, S&P 500, and Gold is back to all time highs and yet to see a close below the 10-day average since March 23. That positive sentiment has obviously impacted equities this month but it's interesting to note all (and more) of this month's gains occurred at night. We're looking higher yet again this morning after GOOG earnings, however, today would mark six straight opens of 40 bps or more for the month. More than 65% of days this month opened higher for a combined gain of 347 S&P points. The net change on the month is positive 307. For today, GOOG earnings should help pause / reverse the impressive two-day run in Russell outperformance over Nasdaq.

Scoreboard

The mover board is sparsely populated today with Crude and Sugar the lone winners. Of note, the three and five-day board has more commodities and commodity currencies to the plus side than recent weeks. Global equities dominated the month's gains while commodities remained laggards. If the recent dollar turn has legs, one would assume Gold (this letter has been bullish on), Silver (looking to trade a breakout higher), and commodity currencies are the beneficiaries.

Events

8:30 AM ET - GDP - backward looking data from Q1

10:30 AM DOE - given volatility in crude this should move for something

2 PM - Fed - Should be non event

Strategy and Levels

Fed is a nonevent today. Powell will remain downbeat given the number of programs they are implementing. Lower for longer is the new message. The ECB tomorrow morning will take additional measures of some kind. ECB Chief Lagarde will avoid rate cuts but in what form will they help the periphery nations.

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