Yesterday was a tough session, but I mentioned it could be on the updated morning report. There are powerful forces that must hold the resistance line here. Meanwhile, the market was like a punch-drunken boxer swaying to every headline on both sides of the aisle. Defensive sectors held, but that’s it.

Inflation is easing, although there is no way it can go away overnight after trillions in free money. But look at when BlackRock (BLK) sees inflation hitting the Fed’s 2.0% target - 2028! 

What might make that target happen sooner is consumers are running out of money - hence, the sharp decrease in savings and the recent slowdown in credit card usage. However, Goldman Sachs (GS) says it will slam retail sales.

Commodities Wake Up

It must be April because commodities are coming to life.

After being down eleven straight months, the Commodities Index is staging a great move and reversal.

Crude oil is leading the way, but it’s not the only commodity catching fire.

Today, the market may mark time and nudge investors to the sidelines. But the big day is tomorrow. So, the market needs to break out this week or risk a noticeable pullback.

Portfolio Approach

There are no sector weighting changes in our Hotline Model Portfolio.

Today’s Session

Question: can something be mild but take two years to recover from?  The first thing I could think of was acne, but is that ‘mild’ for the person dealing with it?

Anyway, the staff at the Federal Reserve sees a mild recession starting later this year that will recover over the subsequent two years.  Looks like the Fed is already boxing themselves in for future mistakes.  I think the underlying trepidation in the market centers on the Fed blowing it – again.

PPI

For the most part, wholesale inflation is coming down a lot faster than expected, save for core year to year, which came in at consensus 3.4%.

Month to month declines are even more dramatic.

Initial Jobless Claims

At 239,000 initial jobless claims were also higher than consensus.

Stocks are edging higher, but not as one might have imagined, with even more evidence the Fed should pause to admire their handiwork.

Once again, there are powerful forces that have bet big on the market imploding.  The rationale was based on runaway inflation, but they are amenable to flipping the storyline to recession, too. 

It’s like those rare 45 music disc from back in the day that had hits on both the A and B sides like The Beatles: ‘Hey Jude’ and ‘Revolution.’

These are bears, not the Beatles, and they can’t have it their way much longer. Hang in there.

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