The Morning Call
5/6/26
The
Market
Technical
Tuesday in the
charts.
https://www.zerohedge.com/markets/oil-yields-down-stocks-crypto-iran-truce-holds
Summary:
A lack of escalation overnight combined with Hegseth's comments that "the
ceasefire is not over," pushed oil prices down and left investors free to
return to buying (tech) stocks with both hands and feet. Gold
gained as the dollar dipped; bitcoin continued to rally amid
ETF inflows. Memory stocks big gainers while some financials
suffered as Anthropic release financial services templates. at the index
level, sharply narrowing market breadth signals draw down risk, and elevated
current positioning exacerbates that risk.
Tuesday 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
Bitcoin hits this technician’s
target.
Wednesday morning
setup: US equity futures are up big this morning and making fresh all-time highs,
led by tech companies, while oil prices and bond yields fell sharply on
optimism that the US and Iran are nearing a peace deal. As of 8:00am
Nasdaq 100 futures jumped 1.7% while those for the S&P
500 gained 1%, with both gauges set to build on record highs. Iran is
evaluating a new proposal from the US to end their near 10-week war,
according to an Axios report. If Tehran accepts the terms, it will lead to a
gradual reopening of Hormuz and lifting of the American blockade on Iranian
ports. Brent tanked 11% to below $98 a barrel. That comes as US
gasoline prices topped $4.50 a gallon for the first time since July
2022. The yield on 10-year Treasuries dropped eight basis points to 4.35%.
In the UK, the rate on two-year UK gilts tumbled 17 basis points.
The dollar hit the lowest level since February, while gold topped
$4,700 an ounce. Bitcoin rose for a seventh straight day. US economic data
calendar slate includes April ADP employment change at 8:15am. Fed speaker
slate includes Musalem (9:30am) and Goolsbee (1pm)
Fundamental
Headlines
The
Economy
US
Weekly mortgage
applications declined 4.4% while purchase applications were down 3.7%.
Month to date
retail chain store sales grew 7.8% versus +7.7% in the prior week.
March new home sales were
up 8.9% versus estimates of +3.9%.
March new job
openings (JOLTS) totaled 6.86 million versus projections of 6.83 million.
https://www.advisorperspectives.com/dshort/updates/2026/05/05/jolts-report-job-openings-march-2026
The April services
PMI came in at 51.0 versus consensus of 51.3; the April composite PMI was up
51.7 versus 52.0.
https://www.advisorperspectives.com/dshort/updates/2026/05/05/sp-global-services-pmi-april-2026
The April ISM
services index was 53.6 versus expectations of 53.7.
https://bonddad.blogspot.com/2026/05/economically-weighted-ism-services.html
The April ADP employment
report showed job gains of 109,000 versus estimates of 99,000.
The May economic optimism
index was 42.6 versus forecasts of 42.0.
International
The April Chinese
final services PMI was 56.2 versus predictions of 52.0; the April final
composite PMI was 53.1 versus 51.8; the April German final services PMI was 46.9,
in line; the April final composite PMI was 48.4 versus 48.3; the April EU final
services PMI was 47.6 versus 47.4; the April final composite PMI was 48.8 versus
48.6; the April UK final services PMI was 52.7 versus 52.0; the April final
composite PMI was 52.6 versus 52.0.
Other
Economic charts of the week.
https://www.carsongroup.com/wp-content/uploads/2026/05/ChartsoftheWeekApr27-May1.pdf
The manufacturing sector is losing jobs.
https://mishtalk.com/economics/manufacturing-is-the-biggest-net-loser-in-jobs-5-quarters-total/
Oil reserves plunging at record pace.
https://giftarticle.ft.com/giftarticle/actions/redeem/094041ef-da83-4429-afdc-60983b672fa4
Farm bankruptcies jump 46% in 2025.
Overnight
News
The White House
believes it's getting close to an agreement with Iran on a one-page memorandum
of understanding to end the war and set a framework for more detailed nuclear
negotiations.
Trump posts: If
Iran agrees to deal, the blockade of the Hormuz Strait will be lifted. "If
they don’t agree, the bombing starts, and it will be, sadly, at a much higher
level and intensity than it was before. "
Donald Trump
earlier said he would pause US efforts to move ships through the Strait of
Hormuz as he seeks an agreement with Iran, citing “great progress.” The
blockade on Iranian ports remains.
China Is Still
Supplying Drone Factories in Iran, Russia Despite U.S. Sanctions. Obscure
Chinese companies are openly shipping dual-use goods such as engines and
batteries, defying American controls.
The US will
implement its 25% tariffs on cars and trucks from the EU “relatively soon” if
the bloc doesn’t swiftly ratify a long-delayed trade deal, the American
ambassador to the bloc Andrew Puzder said.
Inflation
This week’s flare up in the Middle East doesn’t
help with inflation worries.
https://www.capitalspectator.com/latest-middle-east-turmoil-revives-inflation-worries/
AI
Banks are choking on AI debt.
https://www.zerohedge.com/markets/banks-are-choking-ai-debt-bubble-has-started-burst
Summary:
The cracks are increasingly visible just below the surface as investors
are demanding more protection and more favorable pricing. On
Thursday, an issuer tied to SoftBank Group had to raise the yield on
its offering after struggling to attract demand. More ominously, issuers -
especially in the junk-bond market - are getting so-called backstops
from Alphabet’s Google, a covenant guaranteeing that a data center lease will
be paid even if a tenant defaults. There are also provisions that place a
ceiling on building costs. As Bloomberg
notes, these latest developments all suggest an "undercurrent of
anxiety" around a market that has held up well so far - but is still
relatively new and untested. And with estimates that the AI buildout
could cost
up to $5 trillion, including over $1 trillion in spending by the government
itself... . the size of the borrowings is guaranteed to
balloon from here. “At the end of the day, these companies are selling a lot of
debt and they’re going to have to pay up to borrow,” said Robert Tipp, head of
global bonds at PGIM Fixed Income. “The market, after a spectacular
narrowing in corporate spreads to historical tights, is seeing a wall of worry
piled up before it.”
The
Dollar
The dollar bear market is just getting
started.
https://themarket.ch/english/the-dollar-bear-market-is-just-getting-started-ld.16111
Investing
There is gambling going on here.
https://alhambrapartners.com/weekly-market-pulse-theres-gambling-going-on-in-here/?src=news
What are markets
discounting?
https://mrzepczynski.blogspot.com/2026/05/what-are-equity-markets-discounting-it.html
The Wall Street
trap.
https://humbledollar.com/2026/05/wall-street-trap/
How not to invest
in times of uncertainty.
https://behaviouralinvestment.com/2026/05/05/how-not-to-invest-during-times-of-uncertainty/
The best
performing AI stocks.
https://www.riskhedge.com/outplacement/the-3-best-performing-ai-stocks-are
Berkshire’s cash
at $397 billion.
https://talkmarkets.com/article/berkshires-cash-at-397-billion-and-nowhere-to-go-1777929292
The bond market is
on edge.
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