Less opaque monetary policy - was elucidated by Fed Chairman Powell in an interview, in which he was more candid that usual about 'how' data like the PPI (which was above Street estimates) infer higher inflation. 

depositphotos

He downplayed it unusually, mentioning backward revisions, and dissecting key elements.

More important the Chairman stated he didn't see how that would sidetrack a probability of easier policy later in the year. Well, maybe not exactly that, but it was clear he referenced how supply/demand influences, as well as 'monetary policy' can impact the pace of inflation. Ah ha, as noted before, the Fed rate hikes intended to curb inflation, after a period of time, contributed 'to' inflation.

There was a 'stealth' bigger story today...and that's taxing Chinese imports.

Clearly, call it "Meme" trading or not, there's higher energy visible and talk of which stocks have high short-interest relative to average-daily-trading-volume activity. I'm not going to delve into the life-cycle of meme-stocks or absurdities of trying to actually analyst companies that are barely operating, but have big short positions (GME and AMC?).

But there are others with pretty hefty short-positions .. including 'relative to the floating supply'. Two of those are among often-mediocre performers that we'd somehow found ourselves following: SOUN & BBAI. SoundHound for quite some time was alternately lofted and hammered by 'financial engineering' as I observed, and that's also true before for BigBear.ai and maybe that changed. In the case of BBAI, there aren't a lot of institutional holders, just one really, of course that's AE Industrial Partners who also back Pangiam, now BigBear. I note AE has over 141 million shares of BBAI, so they decide what happens. If the Company, under 'enhanced' (to use a term) leadership obtains big DoD or TSA or DHS contracts, other entities will likely flock to BigBear and at a point like that, if AE just sits still, there won't won't be much floating supply = rally.

Market X-ray: 

Finally, the Fed took some of the blame for inflation, and that was in the market's eye a constructive admission (or how I took it anyway).

Could this S&P behavior be the 'calm before the storm'? Of course, given the variables and geopolitics we all know of by now. However the Fed Chairman himself did more to help the set-up today than the Google AI introductions, as the intraday behavior showed. He didn't say liquidity flows would be removed from restriction, but he encouraged players to push things a bit more.

There's another story impacting markets, or should. The White House came forth with increased tariffs on a number of Chinese exports, to help U.S. firms. With all the focus on 'meme' stocks and Chair Powell/PPI, few noticed this. It actually enhances forward outlooks for a myriad of American companies. We won't even touch the single industry that best reflects this (solar companies), neither did buyers. I ponder if Wall Street even recognized this move. Maybe it is assumed to be political ahead of Elections, and likely not gain traction?

Of course the 'policy' aims at automakers, and not just EV's. Helps our few domestic semiconductor companies too, particular Texas Instruments. So if this policy actually takes root and helps EV's, then ON Semi. benefits too.

The Nasdaq made a new closing high, S&P shy, and generally 'not bad' ahead of CPI, which sort of telegraphs decent internals, friendlier monetary policy is ahead (regardless of naysayers), as of course 'risk' variables in the backdrop persist. Green across the Indexes today, and signs of life in some small-caps.

More By This Author: