Riding volatility has characterized sequential shuffling clearly around what might be called last-ditch of 'capitulation-risk' levels for the S&P around 4000 (SPX). The battle is not resolved by a long-shot, as Monday's late fade showed.

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But I suspect (barring exogenous news) we'll see another upside try in the wings. 

Risk-mitigation strategies belatedly dominated money manager approaches, a response to the Fed doing the opposite, trying to catch-up with tardy action in response to inflationary pressures (and their goals 'for' inflation until getting it) that have been brewing since the COVID-stimulus moves, and wage increases.

Of course the Ukraine war exacerbated everything, especially commodities as well as Oil, which had virtually doubled in price before Russia's brazen attack. Now you have most OPEC countries producing 'below' their own target goals, which seems contrived as a way to (greed?) underpin high price levels even if or as demand contracts a little due both to the war 'and' China's shutdown.

Mentioned increasingly, but still underplayed, is the risk of global hunger if not actual famine (probably varies depending where in the world). The U.S. today ordering the return of hundreds of troops to Somalia (yes, Somalia..) reflects a part of this, as that's an area likely to experience food deprivation or violence. I note this because the combination of war, drought, residual pandemic(s) and restless societies is not conducive to peace, stability or even rational thought (WEAT).

Oddly enough, all these issues can be addressed by a ceasefire in Ukraine or even a 'change' of leadership (or dramatic shift to kindness instead of evil) at the core of the Kremlin. Clearly Putin amazes by his not yet realizing (or does he?) he cannot reassemble the old Soviet Union nor intimidate Finland by his moving 7 nuclear-tipped IRBM's to near the border of Finland just today.

Sweden also will be joining NATO, and importantly the mutual-security group today talked of 'interim support and cooperation' (they already do that with the Swedes and now include Finland) while the approval process goes forward (it probably relates to bringing Turkey's Erdogan on-board against his reluctance related to Sweden allowing Kurdish refugees... Erdogan's still a tough cookie).

Companies have had price come down based on concerns that can relatively be reversed, where domestic-centricity is the nature of their business. Others, especially dependent on lengthy supply-chains from China, depend on factors like Beijing's incredible lockdown policies, which if we didn't know better might be viewed as intentionally driving-down 'commerce'.

With all his bluster, one would think President Xi doesn't want China to starve, or to revert to pre-commie-capitalist days, which would also decimate remains of his 'Belt & Road Initiatives', which rely almost entirely on expanding growth. I also suspect that China is stunned at the mediocrity and poor performances, both by manpower and equipment, used by Russia against Ukraine.

Since a majority of Chinese gear's focused on advancing Russian engineering design (with better quality and electronics), they must have second thoughts about trying to militarily take Taiwan, given the prospect of 'Western weapons' intercepting a lot of what they could throw at Taiwan. Nevertheless, the CCP goals to do so are well-known, and the shift to 'resourcing' semiconductors as well as other key production 'to' the U.S. (or other reliable allies) is firmly now underway as will continue. I have bemoaned excess outsourcing for decades.

In-sum:

I continue to suspect that the Fed is not really able to defeat / control the inflation pace, but that other factors could allow the Fed to 'claim' they are able to achieve their goals in a reasonable time. That would allow maybe one or two more rate hikes, but not pushing too far. Sure, this requires the Fed to comprehend not just that they were 'behind the curve' as we argued for some time, but to avoid the other extreme now.

That doesn't mean we won't get the continuation of this shaky S&P process of course, but does offer the idea that the 'cost of money' is getting higher, many people are losing money abroad too (they are invested in Dollar-denominated assets hurt by the Greenback's strength), and there are global reasons going on (attraction of capital) that the Fed cares about but really isn't discussed.

Speaking of global, for the idea of a 'better environment' to work-out, you will need China to calm down (it's closed now more than the so-called opening in a part of Shanghai), and you need Odessa opened either by a ceasefire, or by an understanding which ensures grain shipments from both Odessa and even from Russia's Sevastopol. If Putin was wise, he'd flip his entire approach to a pro-peace 'save the world from starvation' agenda. He's probably not smart in that way, but people with clout in Moscow might be persuading him to take a different tact. So again, how the war goes means there's more at stake for the Ukrainians to prevail (or ceasefire) than most often is appreciated.

Bottom-line: 

The extension effort of Friday's rebound faltered, and that's very typical on a Monday, although there is background that remains concerning (VIX).