Goldilocks Moves in and Forecloses on the Bears

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The tug of war between good news and worry is finally favoring the good news. Inflation is now out of the deflation-zone danger but it’s not too hot. Core inflation rose .1% in April, a little less than expected and held steady at 2.1% over a year ago. Interest rates are rising but they are not surging. The 10-year UST yield is still hovering just below 3%. Oil prices have rallied, helping the out of favor energy stocks regain some mojo, but haven’t pushed high enough to put a dent in consumer spending. The China trade war is on hold, as negotiations seem to be progressing. And most importantly, earnings have not peaked. In fact, in absolute terms, the second quarter dollar amount is actually higher than Q1 and estimates for Q2 growth have moved up to 19% and are likely to go higher. The bears need to hibernate for a while because it looks like most of the geopolitical news has been priced in as well. One possible piece of negative news - the Wall Street Journal reported today that beer sales are down. Oh no.

Please watch Karyn Cavanaugh's latest market comments on CNBC.

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