AM Notes: Storm before the calm

Risk appetite hasn't really picked up overnight...

Some say this is the end of the run and the top is already in this year for U.S. equities...

Maybe this turns out to be the right call, who knows? Forecasting the future is a tricky business...

But let's give it a crack anyway, starting with this chart:

If we get down into that zone (~20 points either side of 4000), I would be amazed if the dip didn't get bought...

There's plenty of narratives to suggest a correction is due: over-stretched positioning, front-running the seasonality of selling in May, taxes coming due, Covid cases & geopolitics suddenly mattering again and so on...

Bloomberg note that the Stumble in Stocks Lacks Easy Explanation for Wall Street Pundits

There doesn't have to be a reason for everything!

I think of it as a fast auction - the bids are ramping, the auctioneer's in full flow, hands flying all over the place emenenenrnenr do I have 4000, YES, 4100, 4150, 4180...?

At some point the hammer comes down on the highest bid... SOLD!

Onto the next auction, the reserve price for this market is 4180, do I see 4180?

4170... 4160... 4100?

And so on until we find someone willing to start the bidding again...

Overnight data

Aussie retail sales came in at the high end of expectations: +1.4% MoM but nothing to get overly excited about...

API data showed that crude stocks rose by 0.436 million barrels - the first increase in three weeks vs an expected draw of 2.86 million...

Oil fell more or less in line with broader risk sentiment yesterday...

BOC will be the main event today, with a strong consensus that the BOC will begin tapering their QE program...

GS comments:

TD:

Background on the jobs growth via Scotiabank: Canadian Jobs Showcase Why The Bank of Canada Should Tighten Before The Fed

The main focus is any change in the messaging & growth forecasts that could pull rate hike projections forward...

Today's Calendar: