Good morning, staff. I am Phil Rosen.

As typically is the case, all eyes can be on Jerome Powell as he takes the stand on Capitol Hill this afternoon earlier than the Home Monetary Companies Committee. He’ll observe that up Thursday earlier than the Senate Banking Committee.

Even after final week’s Fed assembly and Powell’s press briefing afterward, it would not be stunning if he stated one thing market-moving once more over the subsequent two days.

For immediately, let’s verify in on shares.

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1. The S&P 500 is up greater than 14% this 12 months. However with recent recession calls rising every day, the outlook for equities retains getting increasingly divided. 

Morgan Stanley, for instance, has adopted a downbeat view for the months forward. 

The current rally is about to stumble because of a bearish cocktail of temper, earnings, and falling inflation. 

“Investor sentiment and positioning,” the agency’s strategists stated Tuesday, “has turned 180 levels at an inopportune time, in our view.” 

With the newest Shopper Value Index clocking in at 4.0% yearly and poised to ease additional, that might pose a possible headwind for firms. 

Falling costs, Morgan Stanley defined, can minimize into income progress and weigh on earnings. 

One other unhealthy signal for shares: $1.2 trillion in Treasurys can be issued over the subsequent six months, and that may put stress on liquidity.

“This could start to hit asset costs by the tip of this month and carry into the autumn,” Morgan Stanley strategists stated. “Along with this home dynamic, we predict world M2 (in USD) progress can also be prone to flatten out and probably fall once more, including yet one more aspect to the cocktail that might shock newly minted bulls.”

Because the financial institution’s chief US inventory strategist Mike Wilson put it, traders may in the end be in for a impolite awakening as progress stagnates. 

Now, convincing as that will sound, there isn’t a consensus on Wall Road. 

Fairlead Methods’ Katie Stockton forecasts upside, for instance, citing a bullish sign that simply flashed. 

In a word Tuesday, she identified that the S&P 500 closed greater for the fifth consecutive week. 

That was accompanied by a confirmed breakout within the NYSE Cumulative Advance-Decline line, a technical indicator that measures what number of particular person names are taking part in a given pattern.

“That is one thing that we had been searching for to basically affirm the energy of the breakout within the main indices, and now now we have that as indicative of increasing market breadth, one thing that may contribute to the sustainability of the uptrend,” Stockton stated. This line of considering suggests excellent news for bulls, and runs counter to Morgan Stanley’s bearishness. 

To Stockton, the S&P 500 may quickly commerce as excessive as 4,510, or about 3% greater than present ranges.

Which view right here do you suppose is extra probably? Tweet me (@philrosenn) or e mail me (prosen@insider.com) to let me know.

In different information:

2. US inventory futures fall early Wednesday, as traders brace for Powell’s testimony. In the meantime, in London, merchants expect additional Financial institution of England interest-rate hikes after one other shock inflation studying.  Try the newest market strikes.

3. Earnings on deck: KB Dwelling, Patterson Corporations, and Winnebago Industries, all reporting.

4. Six market strategists broke down how you can put money into the present inventory rally. It is doable equities run off to all-time highs within the months forward — and these are the ten trades to make to capitalize on the upside.

5. China’s gold-buying growth is slowing down dramatically. Chinese language retail gold noticed a 24% achieve in Might, down from a previous peak of 44% 12 months over 12 months, Bloomberg knowledge reveals. The nation’s financial woes are beginning to weigh on demand. 

6. A collapse in used automobile costs may assist drive inflation under the Fed’s goal charge. The Manheim Used Automobile Worth index dropped 3.2% within the first two weeks of June, and it is down 9.4% yearly. To Fundstrat’s Tom Lee, this pattern suggests the exact opposite pattern of CPI knowledge.

7. Extra Russian oil than ever earlier than is heading to China. Crude exports hit 2.29 million barrels a day final month, up 15.3% in comparison with the identical time final 12 months. In the meantime, Europe has nearly fully stopped shopping for Moscow’s barrels.

8. Evercore strategists simply listed their favourite shares that might preserve using latest momentum. Buyers can nonetheless rake in earnings in the event that they play their playing cards proper, in response to the agency. Listed here are 16 names on their radar now — and the 5 warning indicators to look out for.

9. Tight provide is driving residence values greater. Dwelling affordability could possibly be a major drawback for the foreseeable future, particularly for first-time consumers. Listed here are the value and stock adjustments of every state during the last 12 months.

10. Lumber costs jumped Tuesday after an sudden spike in housing begins. The important thing stat soared greater than 20% in Might, and single-family begins reached an 11-month excessive. Particulars on the important thing constructing commodity right here. 

Curated by Phil Rosen in New York. Suggestions or suggestions? Tweet @philrosenn or e mail prosen@insider.com.

Edited by Jason Ma in Los Angeles and Hallam Bullock (@hallam_bullock) in London.