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E-mini S&P (June) / NQ (June)

S&P, yesterday’s close: Settled at 4455.50, down 3.75

NQ, yesterday’s close: Settled at 14,004.75, down 212.50

 

Fundamentals:

U.S. equity benchmarks and those from around the world are broadly higher. Let us not beat around the bush; this morning’s strength is Tesla and all about Tesla. If the company had missed earnings, the market would be singing a very different tune. Given yesterday’s activity, the S&P and NQ would have likely cratered back near the week’s lows. Tesla smashed all estimates, EPS, revenue, cash flow, and gross margins. Up 7% ahead of the bell, the major question becomes whether we see the retail flow. Bill Baruch pointed to this in yesterday’s Midday Market Minute (after the close). Retail as a unit has been very powerful. Will we see the type of call option buying we have become accustomed to since the onset of the pandemic? As we often say, the first hour will be telling.

Fed Chair Powell speaks at an IMF conference at 10:00 am CT. His comments must be watched closely after St. Louis Fed President Bullard put the idea of a 75-basis point rate hike and 3.5% by yearend on the table Monday. Traders also want to keep a pulse on the currency and rate markets because ECB President Lagarde speaks at noon CT. This comes after ECB Vice President De Guindos, known to be on the dovish end, pointed to the possibility of an interest rate hike as early as July. The Euro strengthened along with both U.S. and German yields after his comments.

On the economic calendar, data was a slight miss this morning. Initial Jobless Claims came in a touch higher than expected and Philly Fed Manufacturing missed at 17.6 versus 21.0. Lastly, it is important to note that although Tesla crushed earnings and is leading things higher, the deluge from this morning spanning back to yesterday afternoon has been broadly strong.

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NQ (June)

 

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Crude Oil (June)

Yesterday’s close: Settled at 102.05, down 5.56

Fundamentals: Crude is holding at and above the psychological $100 mark. Per Bill Baruch’s discussion in the Midday Market Minute, yesterday’s massive headline draw in Crude was not extremely bullish due to Net Imports dropping significantly by 2.249 mbpd, but it has certainly buoyed price action from the bludgeoning earlier this week. The cause of this drop in Net Imports was record weekly exports by the U.S., marked by a weekly increase of 2.09 mbpd. Also, a sense the EU will soon implement a ban on Russian Oil, maybe as soon as next week, has underpinned stability above the psychological mark. Not much has changed for our intermediate to longer-term perspective in that we expect Crude Oil to remain constructive and trade higher over the next 12 to 18 months barring any tectonic fundamental shifts.

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Gold (June) / Silver (May)

Gold, yesterday’s close: Settled at 1955.6, down 3.4

Silver, yesterday’s close: Settled at 25.271, down 0.12

Fundamentals: Gold and Silver are certainly working through some hardships and damage from the failure that began Monday is still working through the system. The Treasury complex has shown some stability, while the U.S. Dollar is lower, and this is seen as a positive. However, the U.S. Dollar weakness comes due to Euro strength after a July rate hike has been put on the table. Although we do not see such a hike as a headwind for Gold over the long-term, as we have beat the drum on, it is the near-term gyrations that must work through such hawkishness. Speaking of such, we look to Fed Chair Powell at 10:00 am CT..

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Silver (May)

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