“If you don’t have clarity of ideas, you’re just communicating sheer sound.” ~ Yo-Yo Ma

Good evening,

Fundstrat Head of Research Tom Lee has repeatedly told readers that we are in a “buy the dip” regime, and this week the market presented investors with the opportunity to act on his suggestion. Equities were weighed down this week as the market digested the inflationary implications of the relatively hot “prices paid” component that went into calculating the March ISM Manufacturing index, and of the rise in oil prices. Meanwhile, yields climbed, and so did the VIX. 

Some hawkish Fedspeak did its part to pressure stocks as well. During an interview on Thursday, Neel Kashkiri, President of the Minneapolis Fed, floated the possibility of zero rate cuts from the Federal Reserve this year. (Kashkiri is not currently a voting member of the FOMC.) 

Still, heading into the next CPI release, Lee sees a high probability that the numbers will come in below Street expectations. In part this is due to the dissipation of the residual seasonality that artificially swelled January and February CPI numbers. We have already seen a preview of this in Europe, where March inflation numbers came in super-soft after hot numbers in January and February. 


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