The Fed considerations are a dichotomy of sorts; given the Fed stimulating (as they said they still needed too short-term); while outlining tightening plans.

Stock and bond markets are major conduits for Fed policy and adjustments in the middle of 'plans' are responses to reaction or 'system risk' concerns. Thus the Fed has to be preoccupied by not wanting to plunge the economy into any sort of abyss; especially when they've allowed their so-called 'emergency' low rates to prevail for so long. In essence 'they' share blame for excess pricing.

Uncertainty remains the story of this market; with Thursday's pattern more or less what should be expected after Wednesday's broad drubbing. There is the ongoing debates among analysts about sectors, suitability if under higher rate policies and so on; but the reality is this is the same ying-yang challenge we'd discussed for weeks if not months about the behind-the-curve Fed and their challenge to hike rates 'gracefully', without breaking the economic well-being.

Personally I suspect the Fed cannot carry-forth an aggressive series of hikes, given the concentration of average-family-wealth in markets, without the very risk they seek to avoid. Also I don't believe they've got the backbone to 'prove' to everyone that they can 'whip inflation now' (remember 'WIN' buttons?) and I do 'hope' they comprehend how heavily citizens are invested in markets. One investor (must be new) questioned being involved in this market at all.

Well, March of 2020 was the low; the prior year was a distributional high; that generally is a continuation now; and it's hard to ask the bigger stocks to get to higher levels of multiples; especially when monetary policy requires a view of 'multiple compression'. I bemoaned that it remains bifurcated; and so far you do not have individual small stocks distancing themselves from the pack. Lest there is a broad recovery, or they truly have a unique story, small-caps remain 'potential' plays if an when their ship comes in, with regard to sales or deals.

The S&P is not particularly oversold; heck it's still only a couple percent off the record highs; and many stocks are at or near 52-week lows. That conundrum has persisted for awhile; and if one relates this to the S&P itself; sure, there is lots of room for corrections, barring events that indeed could occur globally or related to Covid; or for that matter (least likely) the Fed realizing they aren't in a position to interrupt demand, especially if Covid were to go away. Finally the returns offered to investors outside of taking some risks; won't improve. That's a reason why it's true that 'cash' depreciates in value during inflation; but also it is not trash; and one does want some available for personal needs plus for an opportunity if we happen to get a serious market pummeling in mega-caps.

No metrics will tell you that yet; history will say Government is a hindrance for the moment; but also because they got sobriety too late in the pandemic from a perspective of worrying the economy would be slower in recovery than was of course the case (I don't blame them much because they couldn't compute all the factors; as the closest hint to us was the overall stability in Oil prices).

Bottom line: there is a strong case to be made that the injection of, and then the withdrawing of, large liquidity was a big contributor to the end phase more than once in history. That included a Fed nervously funneling funds in during 1999 worried about a Y2k crisis; then unwinding it when that didn't happen; at the risk of fueling an exponential (and broad) rise that we warned would crash and did. The circumstances here are differing, complicated, don't fit a classic mold.. but are nevertheless destabilizing, while they feint wanting stability.

Uncertainty remains the story of this market; with Thursday's pattern more or less what should be expected after Wednesday's broad drubbing. There is the ongoing debates among analysts about sectors, suitability if under higher rate policies and so on; but the reality is this is the same ying-yang challenge we'd discussed for weeks if not months about the behind-the-curve Fed and their challenge to hike rates 'gracefully', without breaking the economic well-being.

Personally I suspect the Fed cannot carry-forth an aggressive series of hikes, given the concentration of average-family-wealth in markets, without the very risk they seek to avoid. Also I don't believe they've got the backbone to 'prove' to everyone that they can break inflation; no matter what the cost to people.