Yesterday, the market didn’t crash into the closing bell, and that’s progress. But large gains were wiped out midway through the session. I’m not sure if it was Fed Lael Brainard, but if she has wrecked the market in back-to-back weeks, Fed James Bullard will be pissed – look for him to say something like the Fed should remove all stimulus and start from scratch like a game of Monopoly.

The S&P 500 is still hugging the 50-day moving average and closed near the low of the session. The NASDAQ Composite held longer than most large equity indices, but it was downhill fast once the last holder bolted. Right now, the S&P 500 needs to get back above 4,606 and then close above 4,650.

Sector Watch

Energy (XLE) bounced back after approximately ten million people in Shanghai were released from lockdown (another 15 million remain), which means they’ll need fuel to get around. Almost every name in the top twenty largest gainers was from the oil patch. But we got good action in Consumer Discretionary (XLY).

There was still a ton of red on the screen, and it’s clear some cash is looking to the sidelines.

Market Breadth

Market breadth was mostly even except for new lows to highs as weak stocks remain weak because no one is bottom fishing these days.

Market Breadth	NYSE	NASDAQ
Advancers	1,660	2,068
Decliners	1,645	2,642
New Highs	90	72
New Lows	276	289
Up Volume	1.69 billion	2.21 billion
Down Volume	2.34 billion	2.65 billion

Keep an eye on the Russell 2000, which eked out a win to tickle the 50-day moving average.

Earnings Season

It starts with JPMorgan (JPM) this morning, which needs to find a way to reverse a two-year trend of beating the consensus and taking massive hits to its share price. On the other hand, the KBW Nasdaq Bank Index (BKX) is holding above a key support point. Meanwhile, earnings estimates have come down a lot for banks, so they should clear the final bar easily.

Portfolio Approach

There are no weighting changes in our Hotline Model Portfolio this morning.

Today’s Session

Headline PPI soared 11.2% from a year ago and 1.4% month over month (all-time record).

PPI Y/Y

PPI M/M

The PPI news didn’t derail the market, but early gains had already mostly evaporated.  There is still nibbling in the NASDAQ and S&P 500. Keep an eye on the Russell 2000 to see if true bottom fishers are on the prowl.

Interestingly, the market initially shook off an earning miss from JP Morgan (JPM), which missed on earnings.  Conversely, Delta Airline (DAL) impressed the street with guidance, even as capacity is still only 85% of 2019 levels. Here’s the conundrum, the Federal Reserve has to push the stock market lower because it’s the only way to get wealthier Americans to stop spending. 

For all the talk of billionaires cashing in, the fact is college grads gobbled up more than $23.0 trillion the last two years, while high school grads and dropouts got $3.5 trillion.  So much for the Federal Reserve leveling the inequality problem.

Sadly, its poorer households that now have to bear the brunt of the Fed that missed everything as they try to right the ship.

So far, the Fed is trying to get the economy to slow by jawboning it lower, but that has also only highlighted their incompetency.

• The 'accuracy' of #Federal Reserve vice Chair Lael Brainard
• Jul 2020: supported letting #inflation run hot (exceed 2% target)
• Apr 2021: Inflation expectations are "extremely well anchored"
• Sep 2021: "I expect inflation to decelerate"
• April 5, 2022: "Inflation is much too high"
• April 12, 2022: “Inflation is too high, and getting inflation down is going to be our most important task”

Comments

I agree with those who suggest the Feds be quiet! Stop talking! Lorin on 4/13/2022 11:12:08 AM

11%+ on PPI.....Not suprised. We are continually being lied to by all levels of government and by the myriad of buraucratic agencies supported by it. Probably being lied to here, once again. Both CPI and PPI are each understated (in my opinion) in an effort to prop up and make the current administration look less incompetent than it is. Charles Haselberger on 4/13/2022 11:12:08 AM

I agree with Mr. Haselberger - I heard some weeks ago that if the CPI today used the same formula as in 1980 inflation would be closer to 15%, not 8.5! Charles Lucente on 4/13/2022 12:05:01 PM

11% PPI expected. "Jawboning" have not hear that term in some time now. Markets good or bad "Bobs your uncle" FED opens their mouth and never a good thing. William E Blanken Jr on 4/13/2022 12:54:43 PM

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