The Morning Call
4/10/26
The
Market
Technical
Thursday in the
charts.
Summary:
A gentle drift
higher in oil (lower in stocks) overnight (amid ongoing uncertainty on SoH
transit) gave way to a pop in crude futures into the US equity open (on UAE Oil
Chief's comments on SoH not being open). Mid-morning saw hopeful tones
from Israel & Lebanon (and Trump), sending oil lower and stocks higher
(longest win streak in six months) with bonds, gold, and bitcoin all
bid as the dollar slipped as CB expectations shifted dovishly.
Note: the S&P continued
its rally, resetting its 50 DMA to support and pushing above its 100 DMA (if it
remains there through the close on Monday, it will revert to support). I
continue to believe that that huge gap open is too big a matzo ball to ignore. I
await a consolidation that will find a low before committing any funds.
Thursday 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
The latest from
Goldman.
Summary:
Over the next couple of days, talks continue into the 10th. Unless
they break down before they start, the market may stay relatively range-bound.
If anything, the risk is the reverse of what we’ve seen… markets pricing
a hope of a negotiated outcome into the weekend and waking up to disappointment
on Monday. I know enough to know I don’t know here… it’s still a very
tricky setup.Net… there is a tidal wave of technical demand supporting
equities, but I don’t like the level and I don’t like the outlook into the back
half.
If vol compression extends
far enough, I’ll be looking to express downside via structures.
Friday morning
setup: US equity futures are flat, recovering from an earlier drop, and set to
extend a seven-day rally, the longest since October, as investors looked to
talks between the US and Iran for signs a fragile truce can hold while bracing
for a big jump in today's CPI report (full
preview here). As of 8:00am ET, S&P futures were up 0.1%,on track for
their biggest weekly advance in almost a year. Nasdaq futures rose
0.2%, its winning streak is the longest since September, led once
again memory stocks while Mag 7 were mixed (NVDA -0.5% and MSFT +0.5%).
Europe’s Stoxx 600 gained 0.8% as Ukraine’s top negotiator with Russia
expressed optimism about peace talks. Overnight, headlines were
mostly quiet as investors continue assessing the negotiation progress between
the US and Iran. Hormuz and Lebanon remains the two key focuses. Meanwhile,
a BBG headline this morning saying that Ukraine may be near a deal with Putin
drove futs modestly higher; gold trades flat around $4,765. Bond yields are
unchanged to 1-2bp lower, the 10Y TSY trading at 4.29%; oil is 1% higher to
$98.6; base metals are mostly lower. Brent crude was steady at near
$96 a barrel but on pace for its steepest weekly loss in nine months. On
today's calendar, we have March CPI due at 8:30 a.m. ET, followed by
factory orders for February and final readings for February durable/cap goods
at 10 a.m. University of Michigan Sentiment also due at 10 a.m.
Fundamental
Headlines
The
Economy
US
March CPI rose
0.9%, in line; core CPI was up 0.2% versus forecasts of +0.3%.
International
March
Chinese CPI fell 0.7% versus expectations of -0.2%; March Japanese
PPI was up 0.8% versus 0.9%; March German CPI was up 1.2%, in line.
Other
War is depression.
Update on big four recession indicators.
https://www.advisorperspectives.com/dshort/updates/2026/04/09/the-big-four-recession-indicators
Q4 GDP per capita.
https://www.advisorperspectives.com/dshort/updates/2026/04/09/gdp-per-capita-q4-2025-third-estimate
Update on Q1 GDP nowcast.
https://www.capitalspectator.com/q1-gdp-poised-for-rebound-as-fragile-ceasefire-clouds-outlook/
Very low jobless claims continue.
https://bonddad.blogspot.com/2026/04/very-low-jobless-claims-continue.html
Overnight
News
President Trump on
Thursday demanded Iran stop charging tolls for tankers to cross the Strait of Hormuz, as Iran's supreme leader
promised the country would control the crucial waterway.
The truce remained
shaky, as Kuwait reported overnight drone attacks. Israel is preparing for
talks with Lebanon but said it’ll continue strikes on Hezbollah, with Trump’s
push for an exit straining relations.
Volodymyr
Zelenskiy’s top negotiator with Russia said he sees Ukraine nearing a peace
deal with Vladimir Putin. “They all understand the war needs to end,” Kyrylo
Budanov said in an April 4 interview with Bloomberg. B
Iran
Iranian ceasefire won’t undo damage done to
oil infrastructure.
Summary: The cease-fire agreed to between
President Trump and Iran may silence the guns, but the wreckage at
key regional energy hubs is set to
leave lasting economic damage. Iranian missile and drone strikes have hit
dozens of refineries, oil fields and natural gas export terminals across the
region, ensuring a prolonged squeeze on global oil-and-gas markets even if the
Strait of Hormuz reopens.
Shipping stalled as Iran dictates transit
terms in Strait of Hormuz.
https://www.ft.com/content/0ce6a1a0-08b0-4b2b-9634-e5c03c4fbbcd?syn-25a6b1a6=1
Summary:
A ceasefire meant to reopen one of the world’s busiest waterways has instead
left shipowners waiting on the sidelines, with fewer vessels passing the Strait of Hormuz than
during the fiercest days of fighting.
Iran war exposed the weakness of
the dollar.
https://www.ft.com/content/ace89a7d-39f1-4901-ab32-fdb8ab2b86aa
Summary:
targeted sanctions on individuals appear to have been more effective than
general sanctions on countries. “Bad actors” shunned from the dollar banking
system still have to turn to inferior alternatives such as crypto payments
technologies. But far from being a geopolitical weapon for the US, global
finance is arguably a force multiplier for its enemies. As Kynaston’s central
bankers knew, it is much better to threaten dire consequences than to put
yourself in a situation where you have to actually use the big stick. It may
break.
Two weeks---yeh,
right.
Two
Weeks to Stop the Spread of War - by Quoth the Raven
Monetary Policy
Why Fed rate cut prospects have dimmed.
Summary: The cease-fire between the U.S. and Iran offers a chance
to defuse the latest serious threat to the global economy. But for the Federal
Reserve, it may have replaced one problem with another: an energy shock that
lingers just enough to keep inflation elevated without being severe enough to
destroy demand, leading to an extended interest-rate pause.
Fiscal Policy
Congress must significantly reduce the
deficit.
If
Congress Uses Reconciliation Again, It Must Significantly Reduce the Deficit
Inflation
New
inflationary pressures in the pipeline.
How transitory is
inflation?
How
Transitory Is The Inflation Problem Ahead?
Summary:
The bottom line is that there is a risk that inflation will turn out to be more
persistent than widely expected, including by Fed officials, once again. If so,
then beware of an adverse reaction from the Bond Vigilantes once they wake up
from their siesta. We are still using a 4.25%-4.75% range for the 10-year
Treasury yield this year. We are at the bottom of that range now, but thinking
that the next move might be to the top end.
The
Financial System
The private credit boom is not 2008.
https://larryswedroe.substack.com/p/why-the-private-credit-boom-isnt
Another weak spot in the financial system.
Investing
A positive stock/bond
correlation is a terrible reason to add more equity risk.
Earnings optimism.
Summary: Investors who reduced stock exposure may have
a fresh reason to put money back to work due to the upcoming earnings season. Analysts
have been boosting their estimates of Corporate America’s profitability, with
expectations of a 12.5% profit growth in the three months through March. The
S&P 500’s forward price-to-earnings ratio fell to its lowest level since
last April, and some investors are taking advantage of the lower stock
valuations to reestablish equity positions.
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What
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