GOOD MORNING,                                                   7 MAY 2021

That last 45 minutes in New York saw a sudden sharp rally from a falling away low of the day situation, to a strong upward close. This is a pattern we have seen quite a lot lately and would seem to be some kind of procedural large fund or computerised system impact. 

While Biden saying he would consider a 25% to 28% tax rate, was taken as a reason for a relief rally as well, these are still very significant tax increases that will be a negative impact on the economy. In the markets euphoric sentiment state of recent months, it is is doubtful the actual tax increases are priced in at all.

Interesting to see the Federal Reserve finally chipping in on concerns about stock levels in general, and over what they called, internet inspired 'meme' trading. I quite like that. The Fed report raised several areas of concern beyond stock prices having stretched too far. Click on the Fed says image to go to that story.

The NYT chart below for global new cases of covid, shows it is really South America and Europe that remain in big trouble. My concern, is that in Africa and the US, it may well be worse than indicated as people increasingly avoid getting tested unless they actually get quite sick.

That last half hour or so of NY trading brought my immediate bearish view a little into question, but it seems such a flippant move, that after some upward follow through in Asia, it may again begin to falter. I remain very cautious of any upside developments at this point.

Have a great day,
Clifford Bennett