Subsiding inflationary pressures - are not upon us; but are widely projected by a slew of analysts/economists. They mostly concur with the Fed saying the majority are 'temporary imbalances' to be corrected in 2022. Some will, but moderation won't be broad enough to more than lower the pace of inflation.

The overriding concern (as the Univ. of Michigan surveys suggest) suggests a paucity of 'demand' sufficient to maintain high levels of profit margins in 2022. I'd say that we will work-through the supply-crunch and similar; but wage rises won't be widely clawed-back; so generally prices will remain above old bases.

The market continues to adjust to inflationary expectations; although misses the mark with so many suggesting only transitory aspects. The S&P behaves as if it goes to another record high next week; and it just might do that. Keep in mind stability ahead of Thanksgiving week just happens to be common.

Also there's a big 'chicken recall' (really) so besides checking your fridge for a possibly-affected bird, consider that recalled-bears are chickening-out of their case of a stronger Fed and inflation combining to negatively impact stocks, for the moment at least. So perhaps many believe the 'pitch' about rising prices being a transitory aspect; but I don't. I continue to see it as enduring overall.

My view has been and remains that prices 'will' contract somewhat after we're able to get the 'supply-chain' normalized and Oil prices slightly lower. But this is an enduring inflation that will set-the-bar higher for prices & wages beyond the current steep 'angle-of-attack' of inflation (on the chart). Oil higher to for a long-run after some pause to consolidate; but not high enough to destroy the economic basis altogether. Of course a 'Fed-induced' recession could hobble everything from energy prices to earnings; on the guise of helping margins. It is just that the Fed has let this go too far already before beginning tapering.

Price inflation underway is not transitory at all, and will be enduring. Beyond that, in fact, (barring Depression or World War) it's likely to prove to be rather permanent. That means fairly-broad repricing of most materials, goods, and services, has been taking place and even predates the last Oil price surge. It should ease-off somewhat into the middle of 2022; but only temporarily. Sure, we'll have inflation (they already baked that cake); but not at a torrid pace.

The argument for the bullish case is seasonal; is that much front-loading of a Fed tapering; and front-loading of the inflationary impact, is already adjusted. I think not in terms of overall society; but for the market; maybe temporarily.

In sum: the inflation outcome and pace of Fed rate hikes and/or tapering for sure remains data-dependent. Most businesses will be capable of production at or near full levels; and the Fed won't be able to entirely control inflation.

Labor restraints aren't transitory. So the stock market will react to Fed moves and that's part of the jitters looking forward, rather than just late year jostling, as matters. The market needed a breather; and many small stocks have been sort of dead-money given moribund behavior most of the year. However that's pushed some players into the 'what works' stocks after huge momentum runs, and that's more risky; as recent days have evidenced. That remains a danger in this market; while tax-selling or 2022 early accumulation broadly compete.

Behavior we've seen gives confidence to the mega-cap players; but it's totally suspect as dominated by the small universe of under a dozen stocks as noted frequently. Most of the 'pandemic plays' for work-at-home or exercise etc., are and remain defensive; as those should continue to struggle next year.

Techs, like semiconductors or specialized software are doing better and are mostly within accumulation or consolidation phases, ahead of further upside well into 2022; with photonics a fairly unexploited sector; with only a couple players already pricey. Financials are a mixed bag (some popular payment play stocks get crunched but still have opportunity); and selected Oils are ok, if Oil prices don't zoom to triple digits some contend (80's enough for now and yes I know I'm not opposed to seeing Oil push 90; but most has been seen).

If we break this down a bit: I continue to prefer AMD to Nvidia. The latter will not find acquiring ARM an easy proposition; and AMD is carefully positioned for additional acquisitions next year (we'd hope to see in the photonics realm).

Some like Unity and Epic Games, or conversely a processor like PayPal, but I am not that hot on chasing any of those; though all may rebound in early '22. Then there are the huge breakups like J&J; that becomes interesting on both sides (parts worth more than the whole); 2/3 of their business is in healthcare and only 1/3 on the consumer side, possibly contrary to public perception. So could you get a multiple expansion there on the pharma side? Yes; possibly.

We continue to anticipate another rally in the new week; since efforts to break have gone nowhere. And seasonally barring shocks some stability makes lots of sense between now and Thanksgiving the following week.