Our Daily Notes

05/16/2024 10:57 S&P 500 closed above 5,300 for the first time in history. The risk rally accelerated after the CPI data. Not only the CPI but also the decline in retail sales affected interest rate cut expectations. These two developments triggered the decline in 10-year yields. If you say that a soft landing is certain and EPS will continue to grow in the second half of the year as the market expects (EPS growth will increase not only in the magnificent seven but also in other companies) & that the “final plateau” in inflation will be achieved without disrupting the employment market, then you must believe that the rally in S&P 500 will continue. If you say that we are not sure about the soft landing, we want to see the course of the super core together with the employment market during the disinflation process and we do not want to increase risk without seeing Nvidia's balance sheet (more on its expectations), VIX is at its lowest level since January. Yes, there was a record close yesterday, but we cannot say that we will easily go from 5,300 to 5,500. While we believe that the bull market will continue, it is not very understandable that the purchases made as of April 19 triggered the acceleration of the rally with “every detail”. Cleveland Fed’s 16% Trimmed-Mean study: It decreased from 3.61% to 3.52%. Atlanta Fed’s study showing the “stickiness” in inflation: Stickiness in the core decreased from 5.4% to 4.7% in the annualized form of 3 months. 10-year yields are testing the support of the 200-Day Moving Average. At the records of the S&P 500 in March, 10-year yields were around 4.2%. A movement towards this level will continue to support the index. However, there are two legs to the equation. One is the discount rate, the other is Earnings Per Share… The market expects 2 interest rate cuts from the Fed for 2024. Although the rally in precious metals accelerated after yesterday's data sets, they still could not clearly exceed our 2024 targets for gold and silver. We caught yesterday's silver movement nicely on a daily basis. However, it is necessary to sit down and think about how much return potential is "worth taking the risk" above the $2,400 ounce band for gold and $28-$30 ounce band for silver. If EURUSD falls above 1.10 and US 10-year yields fall below 4%, "potential" begins to emerge. Another possibility is of course geopolitical risks... After the International Energy Agency revised its 2024 oil demand downward yesterday, oil experienced intraday sales, but closed positive after the US weekly stocks data. US-China customs duties are not effective in pricing. Meme stocks experienced sales yesterday. Walmart's balance sheet will be announced today. An important name for the retail sector... Bitcoin is traded at $66k. We are above the 50-Day Moving Average... Weekly unemployment applications will stand out on the economic data side. Will the rise experienced last week continue? We will see