Calm before the storm or actual calm. 'To be or not to be' peace in Ukraine is in-question, while the grander focus beyond that has to be inflation and Fed policies seemingly hellbent on bringing down pricing pressures, even though it is historically known that Fed moves really don't greatly impact supply pricing.
The technical pattern remains generally bearish, but there's a bullish 'option' it seems, if you had a combination of 'peace in our times' (so to speak), with Oil still firm, but not ebullient above these levels, and a Fed emphasizing hints of not clobbering the economy (and hence markets) with multiple tools at once.
Trimming the balance sheet was the 'prior' proclaiming probable path Powell pursued (having phun with p's), before talking about multiple rate hikes and of course the Bullard 'charge' out there, which was likely a 'trial balloon' of sorts, to see how the market received that type of Fed suppression.
They got the answer and clearly that provoked other Fed Presidents providing far-tamer views of the pace of snugging-up ahead, though nevertheless totally still on their menus. The Fed doesn't have a magic wand to dispel inflation, of course they think they can end bond purchases and trim the balance sheet to help moderate inflation, but they must realize much of it already spiked and of course they can't influence supply-based inflation, especially from imports.
Oil of course is at the peak of inflation that affects domestic demand concerns you hear about. And Oil did not surge over 100/bbl, nor did we want it to. Now it may do that, everyone use the 120/bbl number resulting from a squeeze. Of course you get what's called 'demand destruction' at a certain level, which for now isn't reached in the United States, which mostly moans about the prices.
Pressure relief. That describes Tuesday's market, as Oil prices retreated a bit, short-term Treasuries didn't rise much on the strong PPI number, and a mixed perspective on whether or not Russia is really retreating from 'near' Ukraine.
Inflation, geopolitical issues, and earnings growth in the face of presumed Fed moves, are the core ingredients of what I call the 'chop suey' market. Looking for a rally Tuesday, and got it, with skepticism about sustainability. It's helpful.
Meanwhile.. a lot of the late comeback might have been short-covering, as a great majority of technicians have been bearish, hence there's been a rising bearish fervor, and while we're not quite there, a fairly wide short-squeeze is a possibility. These lockstep moves across sectors sort of hint at the possibility.
So the market hasn't proven enough yet, but the incremental prospects mostly of 'peace' and of looking at key components that lofted the PPI peaking if one dissects those segments, so maybe next more softer Fed comments? People want the market to go up (technicians notwithstanding), and that sense comes through in a way.
(Of course the market mostly faded after the President threw cold-water on the idea the Russians are actually retreating from near-Ukraine borders.)
The market rewards growth and in a speculative sense that's why a handful of risky stocks that hope to be disruptive and haven't yet jelled into a resolved, or mature, state.. like so many mega-caps that were once good investments of course, but now are immense trading vehicles primarily for heavy funds.
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