The week ahead  will have both fiscal and monetary influences; and none of it is likely to change the mindset of the Fed; although the FedEx sobriety test this week probably compels some grasping of reality from the Fed that finally may be more macro (global) in perspective, away from preceding myopia. 

Dollar strength has been forecast here for a few years; but it does bring more problems to the world, and that's part of the capital flight 'to' the U.S. that held markets up (Dollar-based financial assets easily handled by foreign buying of an index like the SPY) without genuine consideration of share overvaluation.

Prospects of FOMC 'reality check' for next week:

• The Fed Chairman 'finally' may acknowledge what we've been saying all Summer; and that is the Recessions in Europe and China (slightly Japan) all combine as counterpoints to central bank logic about 'excess' growth;
• His 'spin' my have to realize Companies have been resistant to downgrading expectations for the Quarter much less 2023; and with FedEx doing so in a dramatic way (even if it's somewhat to make the new CEO look better in the future since he will get credit for turning things around) the Fed will be compelled to take notice;
• Once the Fed changes their more more optimistic 'take' on global strength probably at this Meeting; they will have to reflect on modified dot-plots as as well as their (tricky) effort to tread the needle without triggering the big (worse than) recession or double-dip economic chasm they supposedly of course don't won't;
• Basically as I've opined for some time, they can't remain myopic and not recognize the global impacts and interconnected relationships that relate to a great proportion of revenue for a lot (if not majority) of multinationals.

In sum: macro economic issues have been underplayed by most economists or analysts; and that's been our point. The FedEx downgrade of prospects is mostly a reflection on the global macro picture we've discussed; and now the Fed will be compelled (or should be anyway) to confront the ignored reality. It was also notable that GE complained about supply chain pressures on profits.

By the way the Cable Rate fell to the lowest level since 1985 today, with GBP on this 30th anniversary of Sterling crashing out of older European Exchange rate mechanisms, we see it below the 1.14 / Dollar level as the UK declines. 

The UK at the time wasn't able to keep pace; they have trouble now with The Bank of England as you might also get BOE rate hikes not just the FOMC; a concern if any of these central banks worry about their behavior to the chagrin of economists who ponder the economic fundamentals. The Exchange Rate is a Dollar story, as it is with capital flight to the USA really from everywhere. 

The point is that most of these economies can likely handle another rate hike, but it's not going to be beneficial to households, 'or' in the fight on inflation to the degree the inflation is not from sectors than monetary policies influence.

Fiscal stimulus would be even more misguided; but that's probably coming at the point where economics crash more than needed, due to convincing folks that everything (the economy) is shrinking. The edge is actually off inflation; at the instigation of lower Oil prices or some foodstuffs; not because of the Fed.

The Fed is presumed to increase rates; but if they do 'and' then Powell talks of macro pressures tempering the Fed's zeal going forward; well that would be likely to 'spring-forth' a rally; however the sustainability would be in doubt.

Sustained advances are almost impossible for Indexes this time of year; and in a more important perspective, because of the impact of offshore revenue, which has been and will be suppressed for some time. This isn't news; as for us we've asserted these points for months about the global impact and how a myopic view of the U.S. 'as if it were an island' was crazy but most analysts, it seemed, embraced the narrow view of domestic economics. We are stronger than the rest, but even the best has to respect and recognize surroundings.

Bottom line: generally lots of stocks are 'hostage to the market' and 'hostage to the hostile Fed', at least for the moment. Global suppression of profits has been evident for a long time to us; and it took comments from FedEx and now GE, to finally get some respect to this macro consideration.

That's at the heart of our concern about not just earnings but valuations; and is why you basically never (in the last few months) hear me talk of higher S&P targets or goals; basically because the Index leadership has been overpriced based on this year's business, much less diminished prospects for 2023.

That will be an interesting year, in which (if not already), investors learn perils of blinded-management of pools of money that ignore components of Indexes or ETF's, which contribute greatly to the magnetic effect their moves have on a slew of other stocks, which often might otherwise move independently. 

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