Green light stocks and commodities

Tradable Events this Week

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1. Record highs

The NASDAQ 100 (NQ) has been lurking within 2% of its all-time high since late February andFridaysmonster gain of 1.8% finally achieved the inevitable. While the lack of wage growth inFridaysjobs report provided the green light, the ground work had already been laid through the exacerbated selloff on tariff talk.Fridaysbreakout above its previous high had strong leadership which is more reason to believe this new leg can run; Netflix +4.5%, Alphabet +3%, Microsoft +2.2% Amazon +1.75 Apple +1.7 and Facebook +1.6%. This weeks inflation data (CPI) will play a key role in next weeks FOMC Meeting, but the inconsistent and mundane wage growth will make it difficult for the Fed to bubble wrap their hike with a hawkish rhetoric. This was the fear at the end of January and upon Fed Chair Powells first congressional hearing on February 27th where he was considered outspoken and hawkish. Without a hot read on CPI this week, we are likely to see a more neutral Fed. This would be a major catalyst for higher equity markets. With the macro-fundamentals now providing a tailwind, the next major upside target in the NQ is 7372-7384. Furthermore, while the S&P lags its all-time high by 3.3%, the small cap and domestic focused Russell 2000 trails its by only 1.4%. A breakout above the old record high of 1619.2 opens the door for the next leg higher in the Russell 2000 which targets 1697-1700.

2. CPI

Februarys Consumer Price Index data is due outTuesdayat7:30 am CT. The Core read that excludes food and energy is the most closely watched data point. Januarys MoM release on February 14th showed an increase of 0.3% for the second month in a row. This was the first time since January and February 2016. All things considered, those two months marked a peak in the rise in inflation. Former Fed Chairwoman Yellen had recently expressed her concern that inflation was stalled due to the Fed hiking rates too quickly. However, new Fed Chair Powell surprised pundits with his hawkish and assertive tone during his congressional hearing and this reinvigorated the Dollar.FridaysNonfarm Payroll already confirmed that there was no traction in Januarys wage inflation. If CPI misseson Tuesday, this would be lights out for the Dollar.

3. China data

Industrial Production, Fixed Asset investment and Retail Sales are due out of Chinaon TuesdayEvening. While many put the largest focus on Industrial Production, we tend to keep a closer eye on Fixed Asset Investment. Regardless of your preference, this data comes at a critical time for commodity prices. The Dollar Index is trading about 2% from its recent low, a jump that put pressure on commodities priced in Dollars. However,Fridaysmiss on wage growth will now provide a headwind for a further rise in the greenback. Lost in the noise last week was a very great on China CPI. A strong read on this trio of data points for the worlds second largest economy combined with a weaker Dollar is likely to spark tremendous broad-based commodity buying.

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