E Market Briefing For Tuesday, May 4

Catalysts to move markets are widely debated, but nobody has handles on 'what' if anything is going to break the market. Well, inflation is here, it's not a transitory short-term factor by the way, but the default view remains that Fed policy will remain expansive. We can (and will) identify a couple catalysts.

The upside of economic activity accelerating as COVID retreats makes sense, of course, but markets can have cyclical moves within secular trends, and that is the allowance for a shakeout that's more visible in the Senior Averages.

As I have outlined for months, we've been in a 'synchronized global recovery', and that growth contributes to the demand issues involved everything from of course steel and copper (JJC), to corn (CORN) and chicken (the chicken issue affected by a fire at one plant), while the Semiconductor 'shortages' is another story.

There isn't exactly a Semiconductor shortage due to rising demand. Rather it was a shortage ignited by Taiwan Semiconductor (TSM) closing production due to the customer cancellations related to COVID. And then when demand soared a few months later (including motor vehicles), they weren't ready and are now in the gearing-up stage to fulfill demand. (TSM's CEO emphasized that on CBS '60 Minutes' last night, in a clear discussion of influences involved. He also did mention they're building a new 'fab' in Phoenix, near Intel's home, and putting more money into their Austin Texas facility, as well as a new Taiwan line.)

Overall they dwarf the competition, and although not emphasized, Apple has a lot to do with this. Apple's own iPhone (and now the new M1 chips) licensed from ARMS, and make by Taiwan Semiconductor. The supply chain systems are long enough that it will take most of the rest of this year for auto makers or similar to obtain adequate supplies. That's not the case for Apple (AAPL), because of their order flow to TSM remaining steady.

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