Commentary: Paul Ebeling on Wall Street; Risk is On

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$DIA $SPY $QQQ $RUTX $SOX $VXX $GBIT

Once again, the trend is your friend until the end.” The trend in the S&P 500 has been Bullish, the market sees it continuing and risk is on.”–Paul Ebeling 

Global stocks again hit a record high and Crude Oil rose Tuesday, as markets shrugged off concerns about rising inflation and looked ahead to US NFP data later this wk that will offer a major clue to the health of the world economy.

Risk markets have posted gains in recent wks as traders balance optimism that some Key markets are reopening after virus-induced lockdowns with concern that rising inflation could prompt central banks to rein in stimulus programs.

The recovery from COVID-19 remains patchy in many parts of the world, with exports reviving but broader economic activity still dampened by measures to contain fresh outbreaks.

Against that backdrop, May Eurozone inflation came in higher than expected at 2%, driven by rising energy costs, above the ECB’s target of below but close to 2% and with even higher levels expected later in the yr.

What happened last week

Mid and Small Posted Solid Sessions

The NAS and the PHLX Semiconductor Sector (SOX) tried but could not break out. The economic data was market-friendly, as stocks rose Thursday after the figures regarding GDP and durables appeared.

GDP rose by 6.4%, core durables rose by 2.5% and home prices surged. Yet, Mr. Biden, the Dems and some RINOs say we need $1-T in infrastructure and a $6-T Biden budget.

An analyst I read, said, “Break out the bananas for the heads of the banana republic!” Adding, “We only thought that Modern Monetary Theory (MMT) was insane. This did not scratch the surface.

The Technicals

The volatility as measured by the Chicago Board Options Exchange’s CBOE Volatility Index (VIX). Stocks are set roar into the Summer and betting against volatility can be a risky play.

What to expect this week

Investors will be keeping eyes on Friday’s NFPs for clues on the progress of the economic recovery and pace of US inflation

The Big Q: By September will the Fed will be in a position to announce a tapering of its bond purchases starting next year,

The Big A: The odds are that it be delayed to December, thus continuing this Bull’s run.

All eyes will be on OPEC+ this wk as it reviews its supply agreement, and any hint of an increase in output could pressure prices.

Have a healthy week, Keep the Faith!

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