The Morning Call
5/7/26
The
Market
Technical
Wednesday in the
charts.
Summary:
AMD beat-and-raise & an imminent US-Iran deal lifted
stock futures overnight but the normal reality-check on Trump-talk wiped a lot
of the lipstick off the oil pig ending well off its lows (and stocks decoupling
higher). Dollar down on another BoJ intervention, gold up bigly (no
EM piggy bank if deal close), and bonds bid. There is currently no
clear support level, but we'd anticipate 0DTE players to come in near
7,300 to offer some put-selling support. It’s harder to justify another
melt-up in equities unless energy risks ease meaningfully, particularly as the
rally has been reliant on narrow tech leadership, according to Barclays
strategists. Stock markets seem increasingly disconnected from signals coming
from the rates and oil markets and “something has to give,” a team led by
Emmanuel Cau writes in a note. Strategists see “global economy nearing crunch
time” as the energy inventory buffer which has cushioned the price shock is
shrinking and risk of demand destruction is edging closer.
The market correction risk.
https://www.advisorperspectives.com/commentaries/2026/05/06/market-correction-risk-summer-2026-risky
An analytical
framework for the VIX.
Thursday morning
setup: The global market meltup is rolling on. US stock futures inch
higher, but are off session highs, with oil falling for a third straight day as
traders waited for updates on a potential US-Iran peace deal that would reopen
oil flows through the Strait of Hormuz. As of 8:00am ET, S&P and Nasdaq
futures were 0.1% higher, after the benchmarks notched back-to-back record
highs. In premarket trading, most Mag 7 stocks were higher although Arm
Holdings dropped 8% after the chip company reported weak fourth-quarter royalty
revenue, hurt by sluggishness in the smartphone industry; the company warned
about weaker demand for lower-end phones due to higher memory
cost. Whirlpool plunged 18% after the household appliance manufacturer cut
its revenue forecast for the full year, missing the average analyst estimate.
Overseas indexes are also rising, bolstered by stocks tied to artificial
intelligence. Japan’s Nikkei 225 was a particular standout, climbing 5.6% after
an 18% rally in Softbank shares. Brent traded near $99 a barrel, extending
a 12% slump in the two prior sessions on mounting confidence that an agreement
in the Middle East is within reach. The dollar headed for its worst
week in a month. Global bonds continued their advance as inflationary pressures
receded. Today's US economic data calendar slate includes 1Q preliminary
nonfarm productivity and jobless claims (8:30am), March construction spending
(10am), April New York Fed 1-year inflation expectations (11am) and March
consumer credit (3pm). Fed speaker slate includes Hammack (10am, 2:05pm),
Daly (12:30pm), Kashkari (1pm) and Williams (3:30pm)
Fundamental
Headlines
The
Economy
US
Weekly initial jobless claims totaled 200,000
versus consensus of 205,000.
https://www.zerohedge.com/markets/jobless-claims-jolts-confirm-higher-hire-no-fire-economy
Q1
preliminary nonfarm productivity rose 0.8% versus expectations of +1.4%.
International
March German factory
orders grew 5.0% versus estimates of +1.0%.
March
EU retail sales declined 0.1% versus predictions of -0.3%.
The
April EU construction PMI was 41.7 versus forecasts of 45.5; the April German construction
PMI was 42.1 versus 49.0; the April UK construction PMI was 39.7 versus 45.7.
Other
New home market cap recovers.
https://politicalcalculations.blogspot.com/2026/05/us-new-home-market-cap-recovers-from.html
But the average price has declined.
More on the housing numbers.
https://bonddad.blogspot.com/2026/05/the-positive-noisy-monthly-march-new.html
Overnight
News
The U.S.-Iran war
had created a “new wake-up call” for global trade, Maersk CEO Vincent Clerc
told CNBC on Thursday, warning that the impact could worsen in the coming
months. “And there is so much we can do on reducing costs, but there is a lot
we need to do on passing on these costs to customers, because it’s such a
massive cost increase that we can’t shoulder it.”
Privately,
President Trump’s advisers are increasingly worried that Republicans will pay a
political price for the rising fuel costs, according to people familiar with
the matter. Many of those advisers are eager to end the war in hopes that
prices will begin moderating before November’s midterm elections.
The jet fuel shock
triggered by the Iran war has been a bigger crisis for the global airline
industry than the Covid-19 pandemic, according to one of Asia’s biggest
carriers AirAsia. FT
Iran
Overnight news.
Monetary
Policy
The false signal set by the Fed Funds rate.
(3)
Inflation, Communication, and Noise - by Quoth the Raven
Inflation
Peace deal or not, the market has inflation
written all over it.
https://www.zerohedge.com/markets/peace-deal-or-not-market-has-inflation-written-all-over-it
Summary: That’s
the message from the commodity versus Treasury ratio, which has surged higher,
with both yields and crude still notably above their pre-war levels.
As
we can see from the chart above, that’s consistent with higher
inflation.
The
Financial System
The Financial Stability Board raises concern
over private credit.
https://giftarticle.ft.com/giftarticle/actions/redeem/0afbd1c0-170c-474e-891e-5eaad294b887
So does Jeffrey Gundlach.
Investing
Two investment
strategies for people who are afraid of the market.
The message from
housing is don’t own a home.
A short history of bubbles.
https://www.albertbridgecapital.com/post/til-death-do-us-part
Stocks as an inflation hedge.
https://klementoninvesting.substack.com/p/are-stocks-a-good-inflation-hedge
Update on Buffett
valuation indicator.
https://www.advisorperspectives.com/dshort/updates/2026/05/06/buffett-valuation-indicator-april-2026
Ideas from ‘How not to Invest’.
https://ritholtz.com/2026/05/10-most-important-ideas/
News on Stocks in Our Portfolios
What
I am reading today
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