First Call - Hedge Fund Telemetry

S&P futures up 0.2% after US equities finished higher in fairly quiet trading on Monday with no big directional drivers in play. Asian markets higher overnight with China a standout, snapping a big four-day losing streak with a 2.75% rally. European equities higher. Treasuries weaker with some curve flattening. Dollar lagging on the major crosses. Gold up 0.4%. WTI crude up 0.9%.
Nothing specific behind firmer tone in global markets. When it comes to US, key tailwinds include strong corporate earnings (which have made P/E multiple more attractive), expectations for another quarter of 4%+ growth, minimal tariff impact on demand, aggressive corporate buyback activity and the gradual nature of the Fed’s tightening cycle (partly a function of moderate wage growth). S&P 500 less than 1% from its 26-Jan all-time closing high. S&P bullish sentiment is back in the extreme overbought zone at 82% and the daily DeMark Sequential Countdown will be on day 11/13 today and the Combo Countdown on day 12/13.
Quiet again from a macro perspective, which may be a good thing given lack of trade rhetoric. China FX reserves looked better, while state media highlighted potential for PBoC to implement additional measures to promote yuan stability. Also more talk about policy fine-tuning measures. RBA left policy unchanged, as expected. Iran has moved to the front burner from a geopolitical perspective. Trump said anyone doing business with Iran will not be doing business with US.
Reuters reported the Bank of Japan hoped to raise rates twice in 2018, but market volatility and a lack of inflation derailed plans. So potentially "QE forever" will end sooner than many expected.
Sanctions on Iran (trading of dollar denominated banknotes, gold, other metals) went into effect overnight. Tougher sanctions (Iranian oil imports) remain scheduled for November.
Higher markets generally mean less volatility; overnight the VIX traded below 11 for the first time since January. And it’s now been over 3 months (May 4th) since the S&P had an intraday range of 2%+. VIX Index is on day 8/13 with a downside daily DeMark Sequential Countdown. I'll post it on today's daily note. Have a great day.

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