Trial balloons are being floated around. These range from Fed-heads trying to suggest that achieving a 'neutral rate' for Fed Funds will allow subsequent 'rate cuts' to follow in 2023, and that's part of the improved optimism. But is it really the case, or a 'trial balloon' to see how the markets would respond?

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Then there's the President floating the idea of militarily defending Taiwan, if it comes to that, to which he was affirmative. Then the White House walked that back, rather than leaving it alone. Of course Beijing protested, but verbally for sure beats military conflict. Hence one can ponder if this was a 'trial balloon' in the President's case signaling China not to make a mistake attacking Taiwan.

I am thinking just like with Ukraine, it's better the potential adversary believe a military response (or strong support of the victim) is forthcoming, lest they do a big miscalculation. (Hence Biden had it right, and staff walked it back thus a degree of ambiguity is reinserted into what American Taiwan policy really is.)

What's happening in Housing is not ambiguous. While it's not 2007 era woes I warned coming back in 2006, this is a sort of return to basic supply-demand, but with a twist. The twist will be the decline of organized buying groups/funds or similar preempting the normal home buyer, due to high prices along with a higher interest rate structure, creating impossibly high rents for normal people as we already see (Florida more expensive than New York in parts) and that's combining to impact both primary residences and multi-unit price ceilings. As materials and builder costs have yet to decline (coming), it's obscured, but the trend of listings and permits suggests these shifts are developing. Risky area.

Forecasts have some upbeat possibilities regarding inflation, but it's just very 'pat' to presume we get a soft landing or emerge well. So many continue with this 'next year if ever recession', and not this year. And talk about bounces as we barely had a bear market 20% S&P shake. Craziness, the slowing is now, the Bear is off 40-80% for most stocks outside of big-caps, and supply shocks are still there even though I envision the ultimate outcome of supply glut (SPX).

The scarier aspect of the S&P decline is that measuring from the peak is wild, and not based on today's global scenario. Even Davos attendees don't want to address this, and some media is being escorted off the premises if they're asking 'actually important' questions. I might tend to be more optimistic, just because the permabears are confident everything will culminate in disaster. I sort of think the market's been having a slow-motion disaster for over a year, so there's some visibility to bring this to an earlier end, but it's still complex.

But a glut of inventory (especially if it relates to food or fuel) is in the far future with more problems short-term unless there's a 'welcomed' shock like peace. If war continues, and China has more COVID (we won't even mention 'Monkey Flu' which I thought already last week was more prevalent than acknowledged or they'd not have made the mainstream news with it) ...barring welcome stuff on the health and food fronts, this remains difficult to turn (like missing one of a couple propellers on a ship, good luck with avoiding incoming ordnance). It remains however a slowdown not easily defined as just stagflation, and it is energy and food related, which makes all this easier to understand than to fix.

In-sum: 

There's a lot of ambiguity, whether it's the President's regarding Taipei or what determines a 'neutral Fed Funds rate', which could be 2.5 to 3.5 per a couple different FOMC members. Or for that matter the analyst ambiguity with regard to the stock market's ability to hammer-out a low. That latter one we'd expected, and while we don't know what exogenous event happens next (with quite a few possibilities, some favorable some destructive), we do recognize if the market happens to be constructing a low, many won't believe it until later.

Personal opinion we run out of steam now, Tesla (TSLA) likely gets hit again, and the retail disappointments have not ended even if the edge came off already. The post-close SNAP cutback gets it slammed, so drags Meta (FB) along.