The Morning Call
5/14/26
The
Market
Technical
Wednesday in the
charts.
Summary:
Despite soaring producer prices and choppy oil
prices, the appearance of Jensen Huang on AF1, retail traders,
and the ongoing gamma squeeze, rescued big-tech stocks
after yesterday's dip (but 'real-world' stocks slipped). Yields
and the dollar rose (BRL tumbled) along with oil but gold and bitcoin
were dumped. Silver surged.
Wednesday in the technical stats.
https://www.barchart.com/stocks/momentum
https://www.barchart.com/stocks/market-performance
https://www.barchart.com/stocks/sectors/rankings
https://www.barchart.com/stocks/signals/new-recommendations
Breadth is
breaking.
https://www.zerohedge.com/the-market-ear/spot-vol-breadth-breaking
Summary:
The melt-up keeps getting narrower. While SPX continues grinding higher,
breadth beneath the surface is quietly starting to break down in a way
historically associated with much more fragile markets. Mega-cap AI and
momentum names continue masking increasingly ugly internals beneath the
surface, even as volatility dynamics and correlation behavior are starting to
resemble some far more dangerous periods from the past. The market keeps going
up. Fewer and fewer stocks are actually participating. That is usually how
the most dangerous melt-ups begin to break.
There is no such
thing as a bubble. I include this piece ‘for the sake of argument’. I like and
agree with a lot of what John Tamny writes. However, in this article, I believe
he confuses ‘there is a seller for every buyer’---which is true---with ‘there
are more buyers than sellers’---which is why buyers keep hitting increasingly
higher offers, taking prices to economically unjustifiable levels.
Counterpoint.
Stock performance
in the month following its earnings report.
https://klementoninvesting.substack.com/p/just-do-what-you-did-last-month
Thursday morning
setup: US futures are higher as we await color on the Trump-Xi summit and US-
Iran negotiations, which are said to be ongoing, and as the tech meltup
continues. What is known so far is that Trump / Xi agree that Iran cannot have
a nuclear weapon, Hormuz should reopen without a toll or militarization; the
countries will look to increase investment in each other as NVDA H20 chips are
approved for a set of Chinese companies. In short, markets are higher on what
BBG calls the 4 Ts: Tehran, Trade, Taiwan and Tariffs, to
which we can also add Tech. As of 8:00am ET, S&P futures
are up 0.3% while Nasdaq futures rise 0.2%. In pre-market trading, Cisco soared
16% after the company reported results that beat expectations and raised its
full-year forecast as it laid off thousands to fund capex. Mag7 stocks are
higher led by NVDA again; semis are mostly lower despite KOSPI adding 1.7%,
while Cyclicals are seeing a bid. Cyclicals, esp Consumer Disc and Fins, would
be among the biggest beneficiaries of a reopening of SoH (oil down, yield curve
bull steepens, lower inflation expectations). Bond yields are flat to down 1bp,
the USD is flat, and commodities are mostly lower. Energy commodities are still
rallying but Metals are weaker dragged by the PGMs as Ags come for
sale. Today’s macro data focus is on Retail Sales and Jobless Data.
Fundamental
Headlines
The
Economy
US
Weekly initial jobless claims totaled 203,750
versus estimates 203,500.
April retail sales
were up 0.5%, in line; ex autos, they were up 0.7% versus +0.6%.
International
Q1
UK (preliminary) GDP growth was +0.2% versus consensus of +0.4%; Q1 (preliminary)
business investment rose 0.7% versus +1.1%; Q1 YoY construction orders were
down 11.9% versus +4.5%; March GDP was up 0.3%
versus -0.2%; the March trade balance was
-L27.3 billion versus -L20.0 billion; March industrial production
declined 0.2% versus -0.3%; March YoY construction
output was off 0.3% versus -2.5%.
Other
Overnight
News
Xi Jinping has
told American chief executives travelling with Donald Trump that China’s door
to business “will only open wider and wider” as the leaders of the world’s two
biggest economies meet in Beijing.
Beijing granted
permission on Thursday for hundreds of American slaughterhouses to resume beef
shipments to China, 15 months after Chinese officials had signaled displeasure
with President Trump’s initial tariffs by allowing the industrial facilities’
licenses to expire.
Chinese leader Xi
Jinping warned President Trump that any mishandling of Taiwan could lead to “an
extremely dangerous situation,” directly raising a point of tension that has
loomed over the meeting. Xi’s statement, while in line with China’s longstanding
position, threatened to dim the mood of a visit both countries hoped would
stabilize ties.
Iran
Overnight news.
US President
Trump's team is now discussing options for military escalation to break the
deadlock, Axios reported. US officials don't expect Trump to take any dramatic
steps during his trip but think he could make his next move immediately
afterward. One option is to resume "Project Freedom," while another
is to launch a new bombing campaign focusing on Iranian infrastructure.
Pakistan Foreign
Ministry said the peace process is intact, its holding on, we remain engaged
and hopeful, Journalist Mallick reported.
Iranian Foreign
Minister Araghchi said although Iranian forces are ready to "deliver a
crushing and devastating response to foreign aggressors, we do not seek
war."
Oil inventories falling a record pace.
Summary: Oil inventories are falling around the world at a record pace
and will continue to drop for months as the disruption to Middle East supplies
from the Iran war intensifies. The market will remain “severely undersupplied”
until October even if the conflict ends next month, according to the
International Energy Agency. The crisis is taking a toll on demand, prompting
the agency to slash projections for a third month since the conflict began,
with world oil consumption set to plunge by 2.45 million barrels a day this
quarter.
No end in sight.
https://www.capitalspectator.com/us-iran-crisis-edges-toward-prolonged-stalemate/
Monetary
Policy
Kevin
Warsh has it wrong. I can’t believe that I am agreeing with Janet Yellen.
Inflation
April real hourly wages.
https://econbrowser.com/archives/2026/05/real-hourly-wages-for-april
April grocery prices.
https://econbrowser.com/archives/2026/05/grocery-prices-and-forecasts
Nowcast for everyday prices.
https://econbrowser.com/archives/2026/05/price-levels-relative-to-january-2025
In
depth look at yesterday’s PPI number.
The
Financial System
The
credit markets are getting better, not worse.
https://www.apollo.com/wealth/the-daily-spark/in-credit-markets-things-are-getting-better-not-worse
The problem isn’t
private credit, it’s concentration. This is such bulls**t. Few disagree with
the principle of diversification. Nowhere in the article does the author
address the rampant markdowns of assets within private credit funds due to performance
failure.
https://giftarticle.ft.com/giftarticle/actions/redeem/e651d46c-ba93-48e1-ad0d-adbc73cec33c
China
How China could use its control over rare
earths against the US.
Investing
Morgan
Stanley ups S&P target to 8300.
JP Morgan breaks
down bull case.
Summary: A reminder to
all that keep telling me that the market cannot hold with WTI above $100/bbl...For
3.5 of Obama’s 8 years in office, oil was $100+ and the SPX tripled, and we had
118 record closes. This was prior to the shale revolution when we were
'running out of oil'......fear not." Overall, the Market Intel
desk thinks the bull case holds until there is a change in fundamentals
or an extreme change in positioning, Risks to our view are (a) a resumption
of the kinetic portion of the Middle East Conflict; (b) a spike in bond yields
/ bond vol; (c) a material reversal in the Tech trade.
A retirement check list.
News on Stocks in Our Portfolios
What
I am reading today
The
rules for getting rich change with every era.
https://www.fastcompany.com/91536443/how-the-rules-of-getting-rich-in-america-change-every-era
The map is closing around China.
Was Alexander the Great really
poisoned?
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