E Market Briefing For Tuesday, June 1

Factors remain lined up  for solid economic growth ahead; however I tend to think a period of moderated market behavior will be experienced after most likely a record S&P high. The 'memorial' for the Bulls interestingly has already been written by the serious 20-50% drops in so many big momentum stocks of the 'past' rally with its roots from our March 23rd low of last year.

So that's a hint that of what I expect might be a rough Summer; later indeed preceding a new upward phase, within context of the cyclical upswing from last year's indicated low. In other words; look for the Index to have a dip within an uptrend while those stocks that corrected (again rotation) might do better.

Nearby we have FOMC prospects of more 'tapering chatter' in June; although the idea that they (and we) shouldn't be concerned about inflation is absurd; a departure from dutifully following the official line that 'inflation is transitory'..

I've outlined why certain commodities can retreat; but the wage-price express is a bit tougher to overcome; as you'll not get workers to except retreats from an ongoing race to higher wages. I'll not complain about giving living wages to workers; but to imagine this won't be passed on via higher consumer and / or industrial customers is naive.

Now that doesn't mean the growth has to contract a lot (comparatively unlikely to exceed what we had in the year's first parts); but does mean stocks till high in price generally have discounted favorable forward guidance; while so many of last year's (work/study/stay home) pandemic gainers already corrected. So sure perhaps some of these can rebound; but perhaps range-bound at best.

In the last couple months I've shared an 'exodus' of lots of stock by insiders in the biggest well-known momentum stocks (or similar); as well as 'high wealth' clientele a couple institutions have acknowledged (BofA and Goldman entirely irrespective of their market outlooks). Those who built excess cash both rotate holdings and might even return to some of those internally corrected.

However, while inflation, the FOMC and Covid concerns (especially in Asia) at this point are merely speculative catalysts to tame the markets. Concurrently I note that these 'concerns' have not troubled the Treasury market; talk about a 'tapering' and so on hasn't budged rates significantly higher. But complacency is not a strategy here; as there are other reasons (capital flight for-instance) to keep an eye on the 10-year.

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