Stocks rose sharply following comments from the Fed and economic data with small caps rising almost three times more than the Dow. The VIX fell as did crude oil.
• Fed Chairman Powell said “what we need to see is clear and convincing evidence that inflation pressures are abating and prices are coming down,” that growth is still positive but supplies are catching up to demand, he said. “It’s going to be a judgment call that we make going forward.”
• Homebuilder sentiment fell to a 2-year low on declining demand and rising costs.
• Retail spending increased 0.9% in April, boosted by demand and inflation. A separate report showed that industrial production rose 1.1% in April, well above the 0.5% estimate.
Headlines of the Day
Powell Wants 'Clear and Convincing' Evidence Inflation is Coming Down
Federal Reserve Chair Jerome Powell told The Wall Street Journal’s The Future of Everything Festival that if things aren’t going as planned, the Fed would adjust its response accordingly.
US, European Firms Rethink China Investment After Lockdowns
US, European Firms Rethink China Investment After Lockdowns. Likely investment will decline in future: AmCham President. European firms are also holding investment due to uncertainty.
Consumer Preferences for Nondurable Goods in Decline
Flexport’s Post-Covid Indicator measures the balance between U.S. consumers’ spending on goods versus services. Our latest update sees the potential for consumers’ preferences for goods to start to decline back to summer 2020 levels in the next three months. The main driver is a downturn in nondurables preferences adjusted for inflation, which may be near pre-pandemic levels by the end of Q2’22.
Shanghai Emerges from Lockdown as Virus Flares Elsewhere
Authorities had set milestone to start unwinding lockdown. Total Covid cases fall to 823 for Monday as outbreak eases.
There are no imminent signs of a slowdown in demand by American consumers judging by the number of shipping containers coming through the Port of Los Angeles, according to Executive Director Gene Seroka.
Cargo is flowing out of China at a consistent pace says Gene Seroka, Port of Los Angeles, Executive Director. He says this means there's nothing pointing at a recession in the US. He also talks about supply chain issues across the globe. He speaks on "Bloomberg Markets: European Close." (Source: Bloomberg)
Economic Data Results for 5-11-2022
U.S. Retail Sales
Retail sales in the US increased 0.9% mom in April of 2022, following an upwardly revised 1.4% surge in March and matching market forecasts. The reading showed American consumers continued to spend despite stubbornly high levels of inflation although it was the smallest gain in retail trade in four months.
United States Industrial Production
Industrial Production in the United States increased 6.40 percent year-on-year in April of 2022, following a downwardly revised 5.4 percent rise in March.
United States Retail Inventories Ex Autos
Retail Inventories Ex Autos in the United States increased 2.5 percent from a month earlier in March of 2022, above a preliminary estimate of 2.3 percent, quickening from a 1.6 percent advance in February of 2022. Figures came above market forecasts of a 2.3 percent gain
United States Manufacturing Production
Manufacturing Production in the United States increased 5.80 percent year-on-year in April of 2022, following a downwardly revised 4.8 percent rise in March. Compared to the previous month, factory output rose 0.8 percent.
Economic Data Due Tomorrow on 5-12-2022
United States Housing Starts
United States MBA Mortgage Applications
United States MBA 30-Yr Mortgage Rate
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