On Monday, stocks finished lower, with the S&P 500 dropping by 38 basis points and the Qs finishing the day up 12 bps. There was no real direction today with the equity market selling off on Russia/Ukraine headlines, but other than that pretty uneventful.

Yields

Yields did move higher today, with the 2-year climbing to 1.58% and the 10-Year to 1.98%. So why didn’t markets fall more? Interestingly, real rates are now trading at -0.94 basis points. Real yields fell because it seems the market is pricing in higher breakeven inflation rates, with the 5-yr rising to 2.87% BEI. Tomorrow’s PPI reading is estimated at 9.1%, down from 9.7% last month. A hotter number would be devastating for the market, pushing yields higher and real yields higher too, but I expect that real yields will probably rise less than nominal rates at this point. A miss on PPI probably eases some rate pressures and allows for inflation expectations to drop.

Bottom line, I still think the 5-yr TIP rises to -0.5%, but it just maybe at a slower pace.

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S&P 500 (SPX)

For the S&P 500, it just seemed like a consolidation day for the bulls couldn’t keep any momentum, and the bears didn’t seem sure if they were ready to take the market lower. There has been a big seller in the market; I’m pretty convinced of that. I had alerted members of RTM to a 3:15 ET seller that had been showing up a few days in a row over the past two weeks, then they disappeared. Now they appear to be back around 1:15 ET. Look, you can say there is news moving the market, or perhaps the seller is using the headlines to push out their stock. But patterns like this are usually not by chance.

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Roku (ROKU)

Roku continued to do what it has done since July, failing at the trend line and pushing lower. That’s what happened again today. Earnings really will be a make-or-break moment. I might use that for a title if I decide to write something.

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Splunk (SPLK)

Splunk rose by 9% today on rumors Cisco was interested in buying the company. I would prefer guide them down and beat by a penny Cisco not be interested. I’m not looking for Cisco to come in with a 20% premium or something; it is not why I bought Splunk in June. Anyway, I think it serves to remind investors that Splunk has an attractive valuation at current levels and another reason why the stock has been so strong, around $110 to $120. If the stock clears $130, it would have a reasonable chance to get back to $168, about 30% higher and better than Cisco would probably offer.

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Salesforce (CRM)

The Salesforce chart looks pretty bad, and with it sitting on support at $164, you have to wonder if it faces the same fate as many other stocks, which is going back to pre-pandemic levels. I will tell you it looks like pre-pandemic levels are what comes next.

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