Regarding US market action yesterday, it was flat on indices but almost trying to touch all-time high. How do you assess that?
Peter Cardillo: Yes, the market is doing quite nicely here and there is reason to be optimistic on several viewpoints. And, of course, the first one is that the war between Iran and Israel and, of course, after the bombings by the United States seems to indicate that it is not going to be a long-lasting one and the United States seems on course to probably negotiate with Iran, so that is a good news.
The second viewpoint is that it is being more or less confirmed by the drop in oil prices after the speculative runup. And the third good news is that yields are moving south and that is, in spite of, the fact that Fed Chief Powell in his two days of testimony basically held firm on monetary policy and indicated that the Fed would not be intimidated and so that is good news.
And, of course, we are now approaching the end of the quarter, so there is a lot of window dressing and then, of course, the market is setting itself up for another positive earning season which will begin in about 10 to 12 days. And so, the market action is indicating that we are probably in the midst of an early summer rally that is likely to last during July and August.
A couple of things that you mentioned here. First is the cooling off of oil prices. The second is the bond yields coming off and the fact that, like you mentioned, Fed chair hinting towards keeping the rates steady despite the pressure, not succumbing to the pressure, you see this market rally like you mentioned to continue because right now the US markets are already sitting at their all-time highs. But if you look at the macros, it is ripe for another rally coming ahead, right?
Peter Cardillo: Yes, I think so and another good point macro data. Of course, on Friday we are going to get the PCE, price inflation index and we will be headed in for a little bit of a positive surprise in the sense that we are not looking for headline inflation to move up by very much, by two-tenth of a percent, in fact, core the same and that is on a monthly basis and on a yearly basis actually headline inflation likely to stay unchanged but the core year-to-year inflation may actually come down to about 3.7%, which would be a good indication that inflation is moving in the right direction. Now, of course, that would probably raise the question as to why the Fed would not cut rates in July.
Well, there is some speculation about that. We have had two Fed members Waller and Bowman who basically are in favour if the data is favourable to cut rates in July. But I remain sceptical of that and once again the reason why Powell and company is hesitant is because they have to wait and see what kind of tariff inflation we will be looking at, if we are looking at any. And so, despite this good news that we expect on the inflation front, we believe that the Fed is not going to lower in July, but certainly there is a good possibility in September.
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