Core PCE, the Federal Reserve’s preferred inflation indicator, came in at 4.9% for Aprilstates Bill Baruch, president of

Yes, inflation is below 5.0% and this was inline with expectations. Personal Spending +0.9% versus +0.7% and Personal Income +0.4% versus +0.5%; these are inflation-adjusted, but the impact of the nominal cost of spending can be seen in this data.

Contrary to Walmart (WMT) and Target (TGT), the consumer is not as bad off and it was not that hard for companies to navigate higher costs; Dollar Tree (DLTR), Dollar General (DG), Ulta (ULTA), and even Costco (COST).

Earnings from Pinduoduo crushed expectations. The China-based agriculture-focused tech platform carries the baton after Alibaba (BABA) beat yesterday (+14.79%). The stock is +8% premarket after gaining 9.45% yesterday.

U.S. and Taiwan plan economic talks in the coming weeks to tighten ties.

U.S. Secretary of State says, “the U.S. remains committed to the One China policy,” on the offensive after President Biden’s remarks.

The One China policy refers to a United States policy which recognizes the PRC as the sole legal government of China, but only acknowledges, and does not endorse, the PRC position that Taiwan is part of China.

China announces military drills near Taiwan in a show of strength after President Biden’s remarks.

To clear up our opinion on China invading Taiwan: Earlier this year, we viewed it as a potential one-two punch; Russia invades Ukraine and then China takes Taiwan. We have held the belief for quite some time there is a Cold War between China and the U.S. (broadly the West). China knows it can inflict inflationary pain through supply-chain bottlenecks and is using this, coupled with lockdowns, advantageously to weaken the West. China has benefited from Russian sanctions, purchasing energy and materials from Russia at a discount and now with its own currency.

We find it more likely that China is patiently waiting for the West to be at its weakest this winter when energy supply is at its tightest.

Learn more about Bill Baruch at Blue Line Futures.