The ”bullwhip effect” is starting to show up in corporate earnings which should lead to a turn down in inflation.  The “bullwhip effect” is when companies over-react to customer demand, over-order inventory which trickles down to wholesalers and manufacturing supplying or creating more products, using more resources which drive resource prices up.

The companies then build too much inventory which will need to be discounted to sell since it costs more to store the inventory than to sell at a discount.  We’re seeing drops in metal, commodities, and energy prices as a result.

Oil and Cotton have fallen sharply since their peaks.  Lower oil prices should trickle into lower gasoline prices over the next several weeks, but current prices will impact June CPI numbers.

China cut their quarantine time down for inbound travelers from 14 days to 7 days.  China had no new Covid infections on Tuesday.  Markets are viewing this as good for business in the world’s second largest economy.

Morgan Stanley (MS) is up premarket after they became to first big bank to raise dividends after passing the Fed’s stress test.  Goldman Sacs (GS), Wells Fargo (WFC), and Bank of America (BAC) are all expected to raise their dividends.

Nike (NKE) is down premarket after warning higher transportation costs and the stronger US dollar will hurt profit margins.  No corporate earnings of note for Tuesday.

The economic calendar is full with Trade Balance and Wholesale Inventories @ 8:30am ET, HPI and S&P/Case-Shiller 20-City Composite @ 9:00am ET, and Consumer Confidence and Richmond Fed Mfg Index @ 10:00am ET.

Volatility continues to drop as we enter the summer doldrums where volatility and volume drop as traders take vacations.

Whale bias is bullish but on light overnight volume.

Fed Chair Jerome Powell reinforced Fed’s James Bullard’s remarks that trade wars with China, Mexico, and the EU put a dark cloud over the US economy.  Powell said yesterday “as always, we will act as appropriate to sustain the expansion, with a strong labor market and inflation near our symmetric 2% objective.”  Fedwatch now places the probability of a interest rate decrease at 53% for July.

Presidential candidate Sen. Bernie Sanders will be crashing Walmart’s annual meeting at the invitation of WalMart workers.  He expected to push Walmart to raise wages higher than the $11/hour minimum wage.

Earnings today include FIVE, AEO, GILL, CPB, CLDR, SFIX, MDB, and UNFI.  The economic calendar is full with focus on the 8:15am EST ADP and 10:00am EST ISM Non-Manufacturing PMI.  Also on the calendar are Final Services PMI @ 9:45am EST, Oil @ 10:30am EST and Beige Book @ 2:00pm EST.

Fed speakers include Vice-Chair Clarida @ 9:45am EST and Bowman @ 10:00am EST.  Volatility is up again due to yesterday’s Fed induced rally.  US stocks had their largest move in over 5 months.  Size bias is long into the US session open.

US stock and futures markets are closed today for Good Friday.  We’ll resume posting on Monday, April 22.  Enjoy the long weekend!

Confusion and doubt are creeping into the markets over exactly what was accomplished during Trump and China’s Xi Jinping over Sat dinner’s trade talks.  The WH economic advisor Larry Kudlow tried to detail specifics from the meeting but only conflicted with trade talk information released by the Chinese.  The start date of the 90-day truce is in question as Kudlow says it’s Dec 1 and China said it was Jan 1.  With no agreement written down and signed, markets are a little nervous.  Meanwhile yields between the 3 and 5-year note have inverted for the first time in over 10 years suggesting that the US economy is slowing.  Nothing of significance on today’s US economic calendar.  The Fed’s Williams holds a press conference @ 10:00am EST.  Earnings include TOL, DG, AZO, MRVL, and HPE.  Volatility remains elevated, however could shrink into today’s US close as US stock markets will be closed National Day of Mourning for former US President George H.W. Bush.  Size bias is short on lighter Globex volume into the US session open.