Risks reduced to ripples by Wall Street; as Deutsche Bank woes (not new if you consider their loan portfolio to former Soviet Eastern European entities); in this case just limited effects on trading, with early S&P declines recovering.

That's not bad behavior especially on a Friday; ahead of a more interesting or eventful week ahead, with a couple of earnings reports just ahead of not just a month's end; but the end of the First Quarter, with some re-balancing likely.

In the meantime the market, and many of us (speaking for myself and maybe the financial authorities who have been through the wringer in recent days) do need a bit of a respite. This past week's reduced 'ripples' as banks once again were in the crosshairs. Fed Chairman Powell tried to mute the market angina it seemed, while Treasury Sec'y Yellen inadvertently exacerbated the concern again, and then fortunately 'clarified' and restated her position the next day.

All that went as we preferred; in other words she didn't lie; but didn't comfort a jittery America. And then by restating that they have 'tools' in-event of trouble, she took the edge off the revived concern appropriately. Traders had enough for this week; and while 'contagion fears' are slimmed-down; they still exist.

In the near future, we expect the Fed to remain worried about inflation; seems more so than the 'banking crisis'; but now they've been awakened belatedly in a way that suggests Treasury and Fed official (surprisingly) didn't keep their eyes on the ball (banks) sufficiently to recognize the fragmented nature of the regulations as applied to small-mid-regional banks versus the major ones. It's a mistake, and one they're trying to deal with ... adequately if uncoordinated.

In Europe the inflation situation is considerably worse than the USA's picture; in both cases the ECB and Fed have been removing the party's punchbowl far too late and doing that for too long, both of which we anticipated for two years (that they were too slow in snugging-up and would cause more long-run pain).

So better late than never; unless they were clever enough to engineer a crisis in banking so that would do their work for them in fighting inflation (they're not that clever to use a crisis to their advantage; even though that's the effect).

In-sum: markets have not really had it wrong. And S&P remains rangebound. Many companies are stressed; or preemptively cutting overhead with layoffs or other moves, worrying about how to migrate through a slow time. Irritated with the Fed and even Treasury as they have not been proper advocates for both business and workers, much less innovation and growth prospects.

They may contend that they are; but their emphasis on fighting inflation they contributed to over the preceding two years is a bit disingenuous to proclaim fighting it now; even though they rapidly did over the past year's hiking series.

That fight is being won 'naturally', with Oil softer than before; with prices down naturally as weather and other issues have less impact (ending drought went from one extreme to the other in California and Arizona, but will be felt by low relative prices in supermarkets this year); and 'maybe' progress towards war's end in Ukraine. All these ebb-and-blow without regard to Fed aggravation; at the same time 'Gov'ment's aggressiveness contributed to poor bank interest rate hedging. Hopefully things will just simmer down and allow merit to prevail for more individual stocks, while major big-caps remain valuation-constrained.

Many stocks remain in deep recessionary-level prices, even without recession in the U.S. economy. There is no reason for the Fed to 'squeeze-out' inflation further, when wages lagged for long, caught-up in a hurry; and are assisted to a degree by vast spending programs, whether it's infrastructure or Defense.

It's astonishing that the Fed and Treasury were asleep at the banking switch; the Fed continues to not be thinking about cutting rates; and barely lip service to the other influences on price levels or inflation unrelated to monetary policy that's within their 'sphere of influence' to control. Really fairly tone-deaf.

By the way, the typical Wall St. argument is to be in 'free-cash flow' stocks as make money; like Microsoft. Nothing wrong with MSFT; but I suspect there's a viewpoint that 'the Street' wants everyone in that or an Apple, to hold markets up, not because there's any immediate impressive value in those stocks. Just tonight, I'll elaborate on the other extreme; innovative disruptive stocks; as I'll 'sound-off') with a few words about a new addition (under 2) earlier this week.

I've heard the debates on monetary policy blunders versus experimentation; and while the antagonists will debate it; the fact remains they have blundered a few times; both with being too low for too long and now too rapid a series of hikes. Furthermore, that run effectively is done; and the crisis they created will limit any further upward pressure on rates, with even a cut likely thereafter.

So the Fed can 'talk hawkish', but not perform that way; and they know that in the wake of contorted responses to the Fed & Treasury slightly lame reactions in the wave of SVB and the other banking failures or challenges. We'd tend to be looking through the current banking challenges to stabilization that pushes the Fed to be friendlier, which unfortunately could happen via even more bank failures or crisis, in the short run; although it's not impossible to avoid distress, of a significant nature. But for the moment there's tense 'air' surrounding this.

Bottom line: there's no drama for the moment; and that's constructive given a morning that began with Deutsche Bank concern. Bank failures used to be more frequent; and not every one triggered a systemic domino-effect cascade of failure. Perhaps this should be emphasized rather than skirted-around, as a lot of average Americans (and small companies too) are too easily freaked.

Of course I understand; but the official proclamations of 'safety' haven't noted it's not unusual historically to have poorly managed bails not hedge properly to the point of failure. It's infrequent but does happen; and almost every time it becomes an entry opportunity in stocks (outside of banks); if markets get hit.

I'm not saying there won't be more failures; in fact some are likely teetering. It is part of why I remain (for a long time) bearish or uninterested in Bank stocks but obviously know the money-center banks are comparatively insulated here.

The new week wraps-up the Quarter and could be a little irregular. While not a dramatic bull or bear call, the assessment of 'aggressive neutrality' remains a proper description of trading swings, as little S&P change occurs overall, so far, and of course the market will breakout of this zone. If danger's avoided in Banks going forward, and the Fed keeps quiet, a Spring rally can evolve.

More By This Author:

Market Briefing For Monday, Mar. 20
Market Briefing For Thursday, Mar. 16
Market Briefing For Wednesday, Mar. 15