'Defensive irregularity'  is a descriptive assessment of Thursday's session. It was a day from the start expected to be grinding higher with consolidation. It was of course sensitive to news regarding the 'war', and technical resistance as well (right at what I call the 'standard deviation mean').

Coming on the heels of overdone upside the prior day; it's all fairly logical. In the Wednesday session few small-caps participated in the rebound; as mostly it was a big-cap affair designed to hold the S&P above crucial levels, and did. For that matter we still are, but the consolidation and jitters are evident, plus it was another day in which 'incremental' selling eroded small-caps Thursday; in essence by the time the session wound to a Close, everything faded a bit.

(Most cohorts are under pressure; especially the pandemic 'theme' stocks.)

The 'modest' negotiations achievement of so-called corridors for evacuation is not actually encouraging; but emphasizes Putin intends to pursue his conflict. If anything the U.S. agreeing with Russia's military to open a 'hot-line' channel to avoid accidental encounters, tells you this is not only back to Cold War era communications, but again that Putin expects to occupy Ukraine and find their troops on the border with Poland, where U.S. Forces will be arrayed opposite.

So even though Oil prices eased somewhat from their spike highs; that's just a trading adjustment and at this point cannot be viewed as a final trend peak. I do think the Fed will have less impact on inflation regardless of their variable pace of Fed Funds increases, than simply Oil prices correcting at some point.

One problem with all these debates about what the Fed will or should do is a realization that demand for Oil, like semiconductors too, remains through the roof essentially. The idea now of domestic sourcing for chips is bipartisan; however this Government 'still' won't budge on invigorating domestic drilling or oil production incentives. In a sense however, 'price' alone takes care of that, if you keep Oil prices up here long enough, and therein lies the rub.

Also, 'if' the U.S. moves to stop Russian Oil sales to the U.S. (no idea how or why we are importing any of that), that would do more to ease inflation reality than the Fed's multi-meeting 25 basis point hikes. Those will have little impact and I'm slightly disappointed that Chairman Powell, usually not exhibiting lots of hubris, didn't flat-out say that the FOMC can't break inflation; lower Oil can.

Almost every Oil supply shock has historically led to Recession. Yes this is a bit different, as it combines a hot war indirectly involving us and sanctions that so far 'carve-out' exclusions of Oil. That both prevents Oil from zooming even higher right now; but also funds Russia's war effort, making all the other U.S. sanctions a bit hypocritical 'for show', if you don't limit Russian oil income.

Of course the answer you'll get is they (Washington) don't want to make this even more difficult for Americans in terms of retail pricing; but in 'real' wartime that's what rationing and price controls are for. Not saying I advocate that, as 'price' alone can become the equivalent if you let this go to the point of what's called 'demand destruction' as I've noted. Just suggesting they can't have this both ways: sanction Russia but also deny Putin the war-making revenue while keeping it not 'too' bad for American consumers, truckers, fliers and so on.

Can the U.S. pump enough Oil to provide another answer? Well so much has discouraged workers from careers in petrochemicals or even roustabout types in the oil patch; that younger generations moved-on into other industries/jobs.

Meanwhile this Administration 'sort of' wants Oil prices high to encourage EV usage. Everyone knows this, and Ford's moves with their newly-designated 'e' division, reinforces growing demand for these vehicles (Mustang's lower sales only reflects lack of production based on chip shortages or more, not on a lack of demand). Rivian did something slightly illogical, though based on inflated component prices: they raised prices across-the-board on pre-orders, and they did 'not' protect existing customers on their books. Then today they rolled-back those price increases for 'existing' pre-orders 'only'. Fiasco won't endear them to the future buyers who will feel they're overpaying.

All that by the way makes Rivian appear expensive, loses good will with early adopters and forthcoming buyers -for now newly delayed- vehicles, and helps competition. By the way in that 'class' perhaps the 2023 E-Jeep is better.

In the near-term most expensive stocks reflect the tensions of the time, and I'll concur that weighing probabilities of what happens with China and Taiwan will matter. But from what I can assess, the 'odds' favor nothing like an invasion coming near-term. If it does, Apple will be sold dramatically as everything for the most part is made 'in' China, with parts from Taiwan 'and' the U.S.

So now Apple still has a backlog; but that's because of heavy Covid in China; which you'd never guess from most mainstream media, behaving as if it's all over (we all wish). There is still some support for Apple from buybacks; which of course nobody should fight. Next week Apple's doing 'Spring' presentation on the 8th; and they will release more or refreshed products despite obvious supply and delivery timing headwinds. Next week will be an affordable iPhone SE most likely; another iPad, and probably the larger main iMac (I await that; but unsure if I need it since my setup is working just fine.. but you know me...if I can't really travel or do anything but work and worry about health; maybe the new iMac will intrigue me; as I spend many hours daily on this passion).

Today CitiBank recommended 'overweight in U.S. equities'. I'm not sure that I can embrace that view 'yet'; but I understand the sentiment. But sure, 'if' Oil is sharply lower, 'if' the Fed restrains itself in comments (aside doing 25 BP hike) and 'if' there's progress to resolution of the war, then sure, stocks can move.

I suspect Citi is thinking that (and I would agree with this) that persistent price increases mean no matter what series of increases the Fed does you'll have a continued inflation. And they think that means equities over debt instruments. I get it, but I suspect you'd hit 'demand destruction' and economic reversal just ahead of that working; so that's why I can't embrace that logic (if it's that).

Bottom-line: other than the defensive consolidation; there's really little new as relates to assessing this market. It retreated from the technical resistance and worries about the Fed, which is pretty much pre-announced. Oil remains key. Friday will probably be defensive as well; with periodic rebound tries. It's hard to say as far as the last hours into 'another' military weekend; as the next or further rounds of negotiations between Russia and Ukraine aren't firmed-up as far as announcements so far. And Russia acts like they're dangling modest concessions for civilians, while buying time to accumulate more territory in the South especially, by their Marines and paratroopers.

The risk is: Odessa in the next couple days. Its fall would/will be demoralizing to a degree. The U.S. Navy is clearly in the neighborhood and has good aerial perspective. However unless provoked by Russia, the US Navy won't get into a fight; although I'm sure F-18 pilots on USS Harry Truman are itching to take-on the Russkies if given a go-ahead. Not to mention USAF F-15's in Romania; a stone's-throw away. However clearly that's just what needs to be avoided.

So we'll likely get another rebound 'try' Friday; but need lower Oil or favorable news to get more than that.