Fairly critical trading returns next week; although likely on-hold (shuffling) ahead of the FOMC decision on rates; and especially the 'news conference'. There are only nominal changes in the market's backdrop; aside Russia did indeed allow resumption of Natural Gas shipments. This wasn't even noted in a significant way by the market or media; which tended to shade the reality by saying Gas was flowing only at 40% of capacity.

That's just the same as flows before and also is considered a safer approach in some ways. But really the 'turbine' they're awaiting is the next point; as well as I think just 'cover spin' by Russia saying they won't sell Oil if there's a price cap on sales to Europe. World market prices fluctuate and this is no different.

Overall market 'sentiment' is more negative than what we're seeing in data; while declines in Oil we were suspecting likely after the excessive hype by a few Wall Street firms with 200 and 300 / bbl price targets that I thought crazy.  Anyway the Oil slippage helps mitigate inflationary worries to some degree; so combine the Agricultural commodities dipping a bit; it might calm the Fed.

Friday's deal we've been mentioning all week (negotiations in Turkey) being negotiated to reopen 'grain shipments' from Odessa in Ukraine, matter. That both mitigates inflationary pressure (since the U.S. won't have to ship grain to Africa to an extent offsetting non-shipments from Ukraine and Russia) and of greater significance, it helps minimize famine, already challenge by drought.

Russia's subsequent attack on Odessa Saturday is outrageous and violates of course the spirit of the 'deal', even though the grain-export Agreement wasn't itself a ceasefire, which the missile attack emphasizes in no uncertain terms.

So after our forecast late June to early-mid July rally; there's like not much of a likely extension higher without an intervening consolidation and/or retreat. I have already indicated that prospect; but the resumption of Natural Gas from Russia (without love but needed) to Germany matters; and was expected as I discussed the pressure testing of the transmission lines a few days ago.

Earnings are variable and probably not going to give clear guidance, because it is impossible. And you likely will have too much read-into this last rally while Europeans (and even China) were busily injecting liquidity while also hiking a key ECB rate. The bond market is pricing-in rate cuts in 2023; so that's also a part of why traders think they need to be buying risk; probably before setback time (Dog Days of Summer); but mostly a time for holding or buying more as it evolves. Of course there could be a financial event which can't be assuaged .. as that's the nature of surprises.

Basically this is seasonal upside exhaustion in the market; it is not an indication of forthcoming collapse based on the way news is flowing.

It is a world of uncertainty; but the best buys were last month in tech or small cap disruptive tech; not in defensive stocks the always-long but fearful money managers and pundits advocated. They did okay; but smaller-cap did better. It's tricky; and while technicians still call for new lows; it's hard to achieve chaos I think, at a time when significant 90% down volume days haven't even realized sustained declines. I'm not saying we won't get one; but needs a catalyst that is beyond what we've already had.

In sum: demand destruction has indeed contributed to Oil reversing a bit. We don't need (or desire) a big decline in Energy; just enough to calm things and of course the important resumption of Natural Gas to Germany matters a lot; at the same time it shows Russia's leverage on energy; as I warned long ago.

There's an economic slowdown going on; but this was as I contended; sort of a 'bad news is good news' environment; because it trims the Fed's likely zeal at this coming week's FOMC meeting. And that is the key to upcoming action.

There are positives and negatives in this market. Prioritizing chaos avoidance was our view of the past few weeks; and we think the Fed too wants progress towards the 'miracle' goal of a soft(ish) landing we've discussed over time.

The barometers of sentiment, of fear, and of economies mostly are negative. Which also means people were positioned for decline; and hence the fuel for a rebound, sustainable or not, was our view since mid-June. Now we go back to caution but not overt bearishness for more than retreats; because there's a varying backdrop that we needed to mitigate the worst case. And I thought it's a possibility that if Russia and Ukraine made a deal on 'grain shipments', that might must be a precursor to a deeper agreement which leads to 'ceasefire'.

There's very little new aside the S&P slip-sliding (not unusual after the run-up) and then firming a bit at the end of Friday's trade. No change in expectations.

Bottom line: the S&P had nice anticipated runs for several weeks and should be near a respite; albeit not a catastrophe, barring any unpleasant surprises.

Basically it's on hold ahead of the coming week's FOMC meeting and action in the Oil market particularly; which did finish in the 90's; which is realistic as a pullback from excess; but not too low; since global demand is still fairly high.

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