Inflation data will set the agenda today as traders await the release of the CPI. Stock markets around the world are higher.
Good Witch, Bad Witch?
The quadruple expirations of futures and options on Wall Street today stirred the market in a cauldron of volatility already this week. Traders are watching to see what more the expirations will do, though many expect much of the action has already taken place.
Other data due today includes the Empire State Manufacturing Survey, industrial production and University of Michigan consumer sentiment index. Yesterday's release of producer prices data showed tame inflation, with the exception of higher energy prices.
The expectation for May consumer prices is that core CPI, minus food and energy, will rise 0.2% and that the headline number could be 0.6%, up from 0.4%.
"If it's (core) 0.2%, the stock market will set a new record," CNBC's Larry Kudlow said earlier in the week. We asked Kudlow again yesterday after the PPI, and he sticks to his forecast. "If it's 0.2, we're going to 14,000 (on the Dow)," he said.
Emboldened by more stable bond rates, stocks traded higher yesterday. The Dow rose 71 points to 13,553, chalking up its biggest two day advance since last August. The S&P was up 7 and Nasdaq was up 17. The yield on the 10-year held in the 5.22% range, helping stocks stay on positive ground.
Deal activity has withered in the past two weeks as investors and deal makers alike assess the new rate environment's impact on credit, liquidity and equity valuations. But a real deal snuffer was floated in Congress yesterday. A proposal from two leaders of Senate Finance takes aim at private equity and would tax publicly traded partnerships the same way corporations are taxed. For instance, that would raise the tax rate for Blackstone, after its public offering later this month, to 35% from 15%, a big bite. That could certainly make Blackstone rivals think twice before filing for their own offerings.
CNBC's John Harwood talked about the proposal on "Squawk Box" today and said there's "a lot of steam behind it" but like most things in Washington right now, there's a good chance legislation won't get done.
Dow Jones reports that Royal Dutch Shell is looking to cut $100 million from its Nigerian operations in the next few years, signalling that Shell could foresee a period of continuing strife and production problems.
Up and Down Wall Street
Goldman Sachs upgrades Intel to buy from neutral. Goldman said it believes Intel rival AMD will move to an outsource model, which should give Intel a big boost.