The usual headlines with regards to China are circulating this morning, and there’s more where that came from for the next two days as a Chinese delegation arrives in Washington today.  Further complicating things, North Korea launched its second missile test in less than a week overnight which just happened to coincide with a visit from a US envoy to South Korea.  Geopolitics are no doubt starting to heat up, and so is the VIX as it poised to close above 20 for the first time since early January!

Outside of geopolitics, there’s also a fair amount of US economic data today after a number of days this week with few or no reports.  PPI for April was inline with expectations at the headline level (0.2% m/m) but weaker than expected at the core level (0.1% vs 0.2%).  Jobless claims, meanwhile, came in higher than expected at 228K versus estimates for a reading of 220K.  On the earnings front, we saw a little bit of a switch this morning as the pace of revenue beats is actually ahead of the pace of EPS beats since yesterday’s close.  Of the over 150 companies that have reported since Wednesday’s close, just 56% have exceeded EPS forecasts by 59% have beat top-line forecasts.  It would have been preferable to see the switch take place as a result of an improvement in the revenues beat rate rather than a big drop in the EPS beat rate.

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As shown below, the VIX has seen quite a surge in the last week.  Last Friday, it wasn’t even a teenager and today it’s over the legal drinking age.  My how they grow up!

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