Inflation hit a 41-year high in the prior month, generating a 9%+ annualized rate I had in mind, based on data gathered before this month. That resulted in a predictable S&P shakeout, albeit not too dramatic considering many believe a number of Agricultural and even Retail prices (dry goods for instance) trying to peak are gradually curving over. Even new vehicle prices are dropping, as I noted with regards to a large car Auction that took place here in Florida.

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Forward guidance from earnings is up next, and tricky. Market turbulence will find little short-term solace, although there's some pressure on companies for clarifying their outlook and 'plans to cope' varying with the global events too. If expectations are muddied, so may be share behavior, especially for the global behemoths that are so dependent on overseas sales for much of their sales.

Even the Dollar level figures into this, as the strong Greenback makes foreign goods cheaper here (hence the lower prices of mostly cheaper mass-market goods in big-box and mega-retailer stores), and U.S. products pricier abroad.

They say the typical American household is spending about $500/month more than last year to buy the same goods & services, and people snug-up budgets (if they can even maintain a budget) accordingly.

At mid-afternoon the Beige (Tan) Book came out, showing price increases in all Fed Districts, along with labor shortages. Cooling economy with inflation at still-high levels (of course) was the summary of the Beige Book Report, more or less replicating the data from the earlier CPI, but mixing-in slower growth or stagnant reflections in some sectors.

The fear is a wage-price spiral of course, but data suggests consumers don't expect the inflation pace we've just had to continue, although I suspect it will unless Oil prices stabilize at a lower level, rather than just rebound. Ceasefire in Ukraine, if it occurs, would be the more seminal event influencing all this.

Bits & Bytes . . .Some news and comments about Canoo (GOEV) the EV maker which we have been following for sometime. The company's stock ripped up on Tuesday (most up and highest volume ever), on news of a vehicle order from Walmart. And candidly it's a lifeline virtually ensuring Canoo survives.

After Tuesday's Close, in a full SEC filing which normally wouldn't be needed after a simple 'sales agreement', we learned that it's actually more involved as might be suspected. Canoo disclosed that it also issued Walmart (WMT) a warrant to purchase up to an aggregate of 61,160,011 shares with an exercise price of $2.15 per share. That not only ties WMT to GOEV 'more' than a simple sale, but the share amount is more than 20% of all the outstanding shares.

To me that's probable cause to continue suspecting more 'afoot' than using a delivery vehicle. Firstly because it makes Walmart a very significant influence on the Company, not just the short-range deliveries for which the intended EV use is targeted (starting in Dallas). And it provides potential 'cash' to Canoo in a sense with eventual dilution (but that's ok as it virtually assures survival and maybe more than merely muddling through).

As part of this deal Canoo also agreed not to supply any vehicles to Amazon as part of the apparently broader deal with Walmart. So it's pretty clear that a feistier Walmart wants to have a unique 'delivery visibility' that Amazon won't. I think it's in that line of thinking, as Walmart included a provision that Canoo must also notify Walmart in-writing of any acquisition offers within 72 hours. In a sense that also infers that 'if' any other company tries to take over Canoo, it will be quickly known (before a determination) by Walmart executives, giving I think the obvious opportunity for Walmart to respond with their own proposal.

The unit vehicle deal appears to be 'non-binding', but may be less pertinent as contrasted to the 'warrants', which is a bit dilutive as some vest immediately, but at the same time give Canoo the 'lifeline' they've needed. The prohibition of sales to Amazon (AMZN) indicates Walmart is positioning to have their mark on the Canoo vehicles, perhaps as an overall part of their rising delivery image.

In addition to its fulfillment centers, Walmart uses 3,800 of its brick-and-mortar locations to fulfill and deliver online orders. Those locations are located within 10 miles of 90% of the US population. So there is the point about 'visibility'. As CEO Aquila stated: 'Canoo's LDV has the turning radius of a small passenger vehicle on a parking friendly, compact footprint, yet has the payload and cargo space of a commercial delivery vehicle. (He says it's a) winning algorithm to seriously compete in the last mile delivery race, globally. We tend to concur.

Clearly the latter is mostly speculation about what might be, but should erase going-concern worries and put this 'all-American' EV company in a good spot. This is a clear-cut aspect of Canoo departing from the multi-year 'do-or-die' financing approach the CEO keeps people innovating (over-simplification) and enhances the chances (nothing is guaranteed) of Canoo making it over time.

After the Beige Book, Atlanta's Fed President Bostic actually responded in a very pedestrian way (meaning he embraced the headline CPI number without a reflection on whether it's hindsight, which it is): he suggested 100 bp increase in rates, and that (no surprise) reversed the mid-session rebound on a dime.

The Fed may have a case to raise by 75 basis points, more says they express 'shock' at the numbers, and it would be a mistake. Bostic's remarks amplify a tendency for reactionary responses, rather than allow a return to normalcy in a reasonable time-frame, especially if Oil prices do not meaningfully advance.

Hiking rates dramatically has the Fed (apparently) determining policy not just on higher Food & Energy issues, but also structural wage increases that really do have 'stickiness', and which won't be impacted much by pressing high rate policies. The U.S. inflation situation is broad, and the Fed is backward-looking to a degree, which has them thinking a stronger response is needed. Maybe they should look at Europe, which has entrenched inflation and tighter policies too, with the result being the deeper 'stagflation' we think should be averted.

The Fed is focused on inflation, not growth, and continues to think they impact matters adequately by re-calibrating to ever-higher interest rates, which is not a great way to approach a coherent strategy including the Oil and war issues, which really are dominant in the situation. The Fed taking an aggressive tact toward deepening what we already feel is a 'recession', and you may even get employment contracting later this year. So then the Fed pivots, and maybe it's a strong effort by the Fed to 'break things' with knowledge they can pivot later.

In-sum: 

It's unclear whether the 'energy crisis' is the worst in world history as at least a couple Oil analyst suggest, but we think not, which is part of why I'd disputed the outrageously high Oil price forecasts a couple Wall Street firms had a couple weeks back. We got retrenchment but a bounce may be next.

Inflation fading is a reasonable expectation, with ideally the Fed not pumping the economic brakes so hard that it creates 'deflation' instead of cooling-down the economic frenzy, which I generally view as already having chilled.

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