Equity markets continue to wrestle with what the "new normal" means for stocks long term. With the rate on the 10-year treasury above 3.0%, it's all too easy to get S&P 500-beating yield with little to no risk. This is a headwind for stocks that may cap gains indefinitely regardless of their performance. This situation is unlikely to change without changing the inflation outlook, which remains hot. The CPI index cooled slightly compared to the previous month but not substantially.

Next week brings another hurdle for the markets. Not only is there a raft of economic data to include retail sales, housing data, and the index of leading indicators but Q1 results are due from the big retailers. The retailers have been struggling with shifting consumer habits, bloating inventory and a tepid outlook for growth; that is not expected to change.