Sanctions and price caps on Russian Oil hit this weekend; anticipations of that have limited the comebacks in the S&P, which did recover nicely after the initial negative reaction to a stronger Jobs number. Russia is saying they just won't sell Oil 'that cheap' and we'll see how it goes. Meanwhile, crowing about low fuel prices simply lets Washington restock Strategic Petroleum Reserves at the lower price area that we called a 'floor' to Oil prices. If China resolves in any way their economic suppression due to their lock-downs, Oil firms anew.

Wage growth is not going to contribute to a wage/price spiral beyond what we already have had; wages won't be clawed-back, and prices for Services aren't coming down. We are short humans in the workforce and that's a real factor, as rumors of economic demise are exaggerated beyond post-pandemic have been strange; as people get a funny stimuli by spending rather than saving. It is an attitude problem that they 'say' runs into an in-elasticity of spending.

In any case the market wasn't bothered by the rising Jobs numbers; and sort of dispelled the initial 'good news is bad news' decline. It might be favorable, at least for earnings and revenues, which matter is some ways more than just the mere 'cost to rent money'. Interest rates are peaking or soon will; so even if the Fed goes too high (we said for many months they were low for too long) the market will anticipate the beneficial aspect of their reversing course.

And I continue to believe the Fed 'wanted' more inflation so as to debase our currency as a way to take-care of Debt Service with depreciated Greenbacks.

In sum: the market actually was very constructive; notice the action recovery and that happened amidst a chorus of general bearishness among pundits.

It is clearer that the Fed's narrative is priced-into the market; which doesn't of course mean you don't get defensiveness in part of this months; not clarify the economic prospects for next year. However, without engaging in more chatter about the prospects; let's say that keeping our idea of a double-dip recession, with most of the negative 'broad' market action behind, is actually constructive and also means earnings won't be great for many companies; but not quite as horrid as some expected.

You might get to a point where the Fed eventually pivots and stocks decline, rather than rally; but that depends where the S&P is at such a point next year.

The longer-term prospects are tough; and we're not trying to be overly tactical as some are; but sufficiently tactical to have identified the June low; rebound; projected decline into September/October; and the 'erratic complex' bottom.

At this point we are not going to turn negative ahead of the December FOMC meeting, at least based on what we see for now; and the year-end proximity. I concur about limited upside S&P prospects; I've said that all along. Estimates for 'earnings' and guidance are already soft and everyone expects more reset of estimates in a negative way.

Here's the catch: that's largely factored into the market; if not a handful of big mega-caps that we're not particularly fond of anyway. Wages are higher with a lot of service costs higher; and the Country is adjusting to that better than may be evident. It's not desirable; and we do blame the Fed for 'free money' for too long; but if they are very careful they can 'thread the needle' through this.

For sure there's 'risk' of deeper problems; but again not catastrophic. And the concurrent situation few talk about is: what happens if geopolitics improve? It is Europe and China that are more sensitive to some of the current problems than just the USA; although most who see things in a linear way ignore that.

IF you get China stabilized (including an emphasis on Covid treatments more so than vaccines, because it's way past the point where vaccine availability is going to suffice, even if they finally broaden injections beyond just to 'ex-pats'.) If you can do that in China; some of the most recent concerns moderate fast.

Add to that Russia and Ukraine. That too can reverse the current crisis and in all candor Putin primarily attacked Russia; suffering more casualties than for Ukraine. Short of Putin being ousted or suffering from pancreatic cancer or of Parkinson's Disease (as I mentioned; British sources again say he has both), just entering negotiations would take the edge off some of it. And Russia sure wants business restoration, even as they are making money from Oil & Gas.

Bottom line: trying to predict next year is incredibly difficult; but it's not likely bubble bursting or collapse the permabears keep suggesting. Sure, a calamity could change that; Fed behavior could elongate the problems; but who knows if they'll clarify the duration of current policy at the upcoming FOMC meeting.

I think the Wall St. Journal has it right (same as we've said): they're moving out of the 'fast lane' into the 'slow lane'; but I'll add, not yet at the 'off-ramp'. It could be higher (or at whatever level they next land on; likely 50 bp higher) for longer, as the expression goes. They will probably adjust depending on how it goes for the general economy; and there's a lot of variability for that now and there's just not the possibility of being more precise about next year. Hence it makes me lament all the pundits who 'feel' they must be optimistic or horribly pessimistic for 2023. They're guessing, especially when it comes to extremes.

Neutrality and an 'active rather than passive' approach may evolve well for the year ahead, almost regardless of the S&P, which could remain rangebound. In terms of the week ahead; mild intraweek rallying; more jockeying around what is an important technical level; and the continued cross-currents of tax-selling versus accumulation of stocks that could well already have begun rebounds.

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